Employment Law

State and federal regulators have launched a coordinated wave of enforcement actions targeting deceptive pricing, hidden fees, and market manipulation across retail, housing, financial services, and technology sectors.

The Delaware Court of Chancery has expanded Caremark fiduciary-duty liability to cover corporate officers and directors who fail to investigate and remediate workplace sexual misconduct in good faith. In Los Angeles City Employees' Retirement System v. Glenn Sanford, et al., the court ruled that oversight duties can extend beyond financial and compliance monitoring to encompass response to credible harassment and assault allegations—particularly when red flags are consciously ignored or mishandled. The case involves stockholder plaintiff Los Angeles City Employees' Retirement System and defendants including Glenn Sanford and eXp World Holdings, Inc.

A former in-house attorney at Workday has settled and dismissed the remaining claims in his 2023 employment discrimination lawsuit against the HR software company. The voluntary dismissal followed settlement discussions and was reported on April 24, 2026.

Colorado has repealed and replaced its groundbreaking artificial intelligence law with a narrower regime focused on "automated decision-making technology." Governor Jared Polis signed SB 26-189 on May 14, 2026, effective January 1, 2027. The new law abandons the prior risk-based compliance model in favor of transparency and notice requirements. Developers must document intended uses, inputs, limitations, and known risks. Deployers must notify users when ADMT drives consequential decisions and provide post-adverse-action notice in certain cases. The law preserves limited rights to correction and human review for adverse outcomes. Enforcement rests exclusively with the Colorado Attorney General under the state's consumer protection statute, with no private right of action.

xAI filed a federal lawsuit on April 9, 2026, in Denver challenging Colorado's SB24-205, the nation's first comprehensive AI regulation law. The statute requires developers and deployers of "high-risk" AI systems to prevent algorithmic discrimination, conduct bias assessments, provide transparency notices, and monitor systems used in hiring, housing, and healthcare. The law takes effect June 30, 2026. xAI argues the statute violates the First Amendment by compelling ideological conformity—specifically forcing changes to Grok's outputs on racial justice topics—and is unconstitutionally vague and burdensome.

Organizations across all sectors are facing a wave of litigation over their data practices and AI systems. According to a Baker Donelson report, these legal challenges now extend well beyond technology companies and data brokers to affect organizations of every size that rely on data for operations, network security, regulatory compliance, and contractual obligations. The disputes involve civil liberties groups, workers' advocates, and privacy organizations pursuing claims centered on data privacy violations, algorithmic bias, unauthorized data use, AI system liability, and worker surveillance.

On April 1, 2026, the U.S. Court of Appeals for the Seventh Circuit issued a consolidated decision in Clay v. Union Pacific Railroad Co. holding that Illinois' August 2024 amendment to the Biometric Information Privacy Act applies retroactively to all pending cases. The amendment, enacted as SB 2979, caps statutory damages at one recovery per person per biometric collection method—eliminating the "per-scan" liability model that had exposed defendants to exponentially higher exposure. The court reversed three unanimous district court decisions from the Northern District of Illinois that had ruled the amendment applied only to future claims.

Courts nationwide have sanctioned attorneys for submitting briefs containing fabricated case citations generated by artificial intelligence tools. Rather than targeting the technology itself, judges have held lawyers personally accountable for failing to verify AI output before filing. A Massachusetts attorney faced discipline for citing fictitious cases produced by AI systems. In the federal case Flycatcher Corporation v. Affable Avenue, a judge imposed severe sanctions including a default judgment after the defendant's attorney repeatedly cited fabricated cases despite warnings. These decisions reflect a judicial consensus that reliance on unverified AI constitutes a breach of professional responsibility, regardless of whether the attorney or the system originated the error.

Palantir CEO Alex Karp has publicly attacked low-quality AI outputs as "slop," positioning the company's AI Platform (AIP) as a secure, enterprise-grade alternative built on its Foundry data infrastructure. The criticism comes as Palantir faces investor concerns that it may lose market share to cheaper, faster standalone large language models from OpenAI and Anthropic—competitors that don't require Palantir's ontology-based data backbone.

The California Privacy Protection Agency opened a public comment period on April 20, 2026, to solicit input on potential updates to California Consumer Privacy Act regulations governing privacy notices, disclosures, and employee data handling. The agency is examining whether current rules—which require businesses to provide privacy policies, notices at collection, and rights notifications for employees' personal information—require revision or new provisions specific to employment contexts. Comments are due by 5:00 p.m. PT on May 20, 2026, submitted via email to regulations@cppa.ca.gov or by mail. The agency has posed specific questions on consumer clarity, effective notice examples, worker expectations for data collection and use, and employer compliance challenges.

Core event: On March 10, 2026, a panel of legal experts discussed how AI is disrupting law firms and legal departments, debating the enduring value of human judgment amid AI-driven efficiencies in tasks like risk profiling and pretrial discovery[9][1].

Colorado Governor Jared Polis has signed S.B. 26-189, substantially weakening the state's artificial intelligence law just weeks before its original effective date. The amendment repeals key provisions of Colorado's 2024 AI statute and replaces them with a narrower compliance framework centered on notice, adverse-decision disclosures, human review, and record retention. The new law delays implementation to January 1, 2027.

Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez have introduced a proposal for a federal moratorium on AI development and data centers, characterizing artificial intelligence as an "imminent existential threat." The call for restrictions has crystallized a fundamental policy divide: whether AI requires aggressive regulatory intervention or a risk-based approach that permits innovation while addressing specific harms.

The Eastern District of Virginia has denied Alarm.com's motion to dismiss a trade secrets lawsuit brought by former partner SkyBell Technologies. SkyBell accused Alarm.com of misappropriating video doorbell technology and poaching employees after the companies' partnership ended in late 2022. Alarm.com had argued the three-year statute of limitations under the Defend Trade Secrets Act and Virginia Uniform Trade Secrets Act barred SkyBell's July 2025 complaint. Judge Rossie D. Alston Jr. rejected that defense, holding that SkyBell could not have discovered the alleged misappropriation earlier because a 2015 Development and Integration Agreement between the parties explicitly prohibited reverse engineering and required confidentiality—contractual restrictions that remained in force until the agreement terminated in November 2022.

Samantha Randazzo, 33, gave birth on a courtroom bench in Brooklyn Friday night while her arraignment on trespass and drug-possession charges proceeded. According to defense organizations, court personnel initially continued the proceeding after Randazzo went into labor. Her attorney, Wynton Sharpe, said court officers responded once delivery appeared imminent; court officials countered that restraints were removed promptly.

On April 1, 2026, the U.S. Court of Appeals for the Seventh Circuit unanimously held that Illinois' August 2024 amendment to the Biometric Information Privacy Act applies retroactively to all pending cases. In Clay v. Union Pacific Railroad Co. (consolidated with Willis and Gregg), the court classified the amendment as procedural rather than substantive, allowing it to govern cases filed before its effective date. The amendment fundamentally restructures BIPA damages by capping recovery at $1,000 per violation for negligent violations and $5,000 for intentional ones—eliminating the "per-scan" theory that previously allowed plaintiffs to multiply damages across each biometric collection or transmission event.

On April 14, 2026, Magistrate Judge Tim A. Baker of the U.S. District Court for the Southern District of Indiana issued an order in White v. Walmart (Case No. 25-cv-01120) sanctioning plaintiff's counsel for relying exclusively on artificial intelligence to identify deficiencies in the defendant's discovery responses. The court held that while AI can serve as a useful tool, it cannot substitute for attorney judgment and does not satisfy the Federal Rules of Civil Procedure's requirement that parties meet and confer in good faith before escalating discovery disputes.

The Department of Justice unsealed charges Wednesday against 30 individuals in a decade-long insider trading scheme centered on nonpublic information from major M&A transactions. Nicolo Nourafchan, a Yale Law graduate who worked at Sidley Austin, Latham & Watkins, Cleary Gottlieb, and Goodwin Procter, led the conspiracy. Participants traded on confidential deal details including Occidental Petroleum's $55 billion acquisition of Anadarko in 2019 and Burger King's $11 billion takeover of Tim Hortons in 2014. The scheme leveraged Nourafchan's recruitment of law school classmates positioned at major firms with M&A access. A former Wachtell Lipton lawyer and Yale classmate of Nourafchan has been identified as a co-conspirator; he later worked at an investment bank. The Southern District of New York is prosecuting the criminal case while the SEC pursues parallel civil charges.

Chirayu Rana, a 35-year-old former JPMorgan investment banker, has filed a civil lawsuit against Lorna Hajdini, a senior executive director in the bank's Leveraged Finance Division, alleging sexual assault, drugging with Viagra, racial harassment, and workplace coercion. The case, initially filed anonymously in early 2025, became public in May 2026 when Rana identified himself and submitted detailed court filings. Rana is seeking over $20 million in damages after rejecting JPMorgan's $1 million settlement offer. He is represented by Daniel Kaiser, a prominent New York attorney known for representing accusers in the Jeffrey Epstein matter.

Fast Company published a workplace-advice piece arguing that employees should pause before committing to new work goals and ask six critical questions: Is the goal tactical or adaptive? Who are the stakeholders? How does it connect to business priorities and personal motivation? Where does it fit in current workload? And how much effort does it truly deserve? The article frames goal-setting as a human conversation between employee and manager, with AI serving only as a drafting and tracking tool. The six questions organize around three core areas: clarifying the target, understanding its significance, and assessing available resources.

A 90-day cultural transformation framework has emerged as an alternative to mass workforce replacement during AI adoption, directly responding to IgniteTech CEO Eric Vaughan's controversial 2025 decision to terminate approximately 80% of his staff after employees resisted AI tools despite substantial training investment. Organizational researchers and business leaders have synthesized a three-phase approach—Diagnose, Rewire, Embed—designed to build AI-ready cultures without layoffs. The framework rests on a core finding: cultural misalignment, not technological incapacity, drives AI transformation failures. Writer's 2025 enterprise AI adoption report documents that nearly one-third of employees actively sabotage AI rollouts, with resistance particularly pronounced among technical staff and Gen Z workers (41% report active sabotage).

Mercor, a $10 billion San Francisco AI startup that supplies training data to OpenAI, Anthropic, and Meta, is defending itself against at least seven class-action lawsuits filed in recent weeks. The suits stem from a data breach last month that exposed contractor information including recorded job interviews, facial biometric data, computer screenshots, and background checks. Plaintiffs allege Mercor violated federal privacy regulations by collecting extensive data through monitoring software like Insightful, sharing it with AI partners, and using interviews and proprietary materials to train models without adequate consent or disclosure.