State attorneys general increasingly impact businesses in all industries. Our nationally recognized state AG team has been trusted by clients for more than 20 years to navigate their most complicated state AG investigations and enforcement actions.
State Attorneys General Monitor analyzes regulatory actions by state AGs and other state administrative agencies throughout the nation. Contributors to this newsletter and related blog include attorneys experienced in regulatory enforcement, litigation, and compliance. Also visit our State Attorneys General Monitor microsite.
Contact our State AG Team at StateAG@troutman.com.
Troutman Pepper Locke Spotlight
From Cell Phones to Tractors: The Right to Repair Movement Drives On
By Stephen C. Piepgrass, Brad Weber, and Christy Matelis
In this episode of Regulatory Oversight, Stephen Piepgrass is joined by colleagues Brad Weber and Christy Matelis from the firm’s Antitrust Practice Group to explore the evolving landscape of right-to-repair laws across the United States.
AI Legislation: The Statewide Spotlight
By Gene Fishel, Kim Phan, Stephen C. Piepgrass, and Chris Willis
Join us for a special crossover episode of The Consumer Finance Podcast and Regulatory Oversight, where Chris Willis, Kim Phan, and Gene Fishel delve into the evolving world of state AI legislation. As AI becomes a pivotal tool in the financial services industry, understanding the implications of new laws is crucial. This episode focuses on Colorado’s comprehensive AI law and its potential influence on other states, exploring key issues such as algorithmic discrimination, privacy, and cybersecurity. Gain insights into best practices for compliance and learn how state attorneys general are stepping up enforcement in the absence of federal action. Don’t miss this informative discussion bridging consumer finance and regulatory oversight.
Multistate AG Updates
Illinois and Minnesota AGs Join FTC’s Lawsuit Against Private Equity Firm
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Illinois Attorney General (AG) Kwame Raoul and Minnesota AG Keith Ellison have joined the Federal Trade Commission (FTC) in a lawsuit to block the acquisition of Surmodics Inc. by GTCR BC Holdings LLC, two major manufacturers of critical medical device coatings. The regulators allege that the merger is anticompetitive, violating Section 7 of the Clayton Act and Section 5 of the FTC Act.
Single State AG Updates
Price Transparency: Massachusetts Adopts New Consumer Protection Rules
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The Massachusetts attorney general’s (AG) office has finalized new consumer protection regulations aimed at eliminating hidden “junk fees” and improving price transparency. Set to take effect on September 2, the regulations apply across a broad range of industries and are intended to curb alleged practices that obscure the actual cost of goods and services.
Illinois AG Raoul Reaches $12M Settlement With Alternative Energy Company
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On April 16, Illinois Attorney General Kwame Raoul announced a $12 million settlement through a consent decree with Direct Energy Services LLC (Direct Energy). Direct Energy is an alternative retail electric supplier (ARES) and an alternative retail gas supplier (ARGS). Companies like Direct Energy are certified by the Illinois Commerce Commission to sell electricity and gas to residential consumers. This settlement arises from Raoul’s allegations that Direct Energy misled consumers, causing them to pay substantially more for energy than they would have if they had remained with their default public utility company. Specifically, Raoul alleged that Direct Energy falsely promised lower rates, while actually charging energy rates more than 230% higher than the public utility.
AG of the Week
Josh Kaul, Wisconsin
Josh Kaul was sworn in as Wisconsin’s 45th attorney general (AG) on January 7, 2019. Kaul’s top priority is public safety. Under his leadership, the Wisconsin Department of Justice (DOJ) has worked to combat the opioid epidemic and the increasing use of methamphetamine in Wisconsin, to make schools and communities safer from gun violence, and pass legislation to prevent another backlog of untested sexual assault kits. Kaul is also dedicated to ensuring safe and clean drinking water, combating climate change, and protecting the rights of Wisconsinites.
Kaul served as a federal prosecutor in Baltimore, where he prosecuted murderers, gang members, and drug traffickers. After returning to Wisconsin, he worked to protect voting rights, challenging restrictions on voting in court.
Kaul grew up in Oshkosh and Fond du Lac. He attended Yale University, where he majored in history and economics and graduated with honors. He then attended Stanford Law School, serving as president of the Stanford Law Review.
Wisconsin AG in the News:
- On May 9, Kaul, along with 14 other AGs, filed a lawsuit against the Trump administration to prevent it from bypassing essential environmental reviews for energy projects, arguing that such actions threaten clean water, natural resources, and public health by weakening protections under federal laws like the Clean Water Act.
- On May 8, Kaul, along with 16 other AGs, filed a lawsuit against the Trump administration to prevent the alleged illegal termination of congressionally approved funding for electric vehicle infrastructure, which threatens Wisconsin’s $62.65 million allocation and could negatively impact local jobs, businesses, and environmental progress.
Upcoming AG Events
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May: RAGA | ERC Retreat | Oahu, HI
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May: DAGA | Williamsburg Policy Conference | Williamsburg, VA
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June: RAGA | Summer National Meeting | New York, NY
For more on upcoming AG Events, click here.
On May 12, President Trump issued an executive order, “Modifying Reciprocal Tariff Rates to Reflect Discussions with the People’s Republic of China” (the Order), temporarily lowering reciprocal tariffs on Chinese imports that had been imposed pursuant to Executive Order 14257, as amended by Executive Order 14259 and further amended by Executive Order 14266 (collectively, Reciprocal Tariffs) for a period of 90 days starting May 14. This move follows discussions between U.S. and Chinese officials in Switzerland aimed at addressing trade imbalances and fostering economic cooperation. The Order provides limited, short-term relief to importers while trade negotiations between the two countries continue.
Background
The Order comes after a series of escalating tariff actions taken by China and the U.S. On April 2, President Trump issued Executive Order 14257, imposing a 34% reciprocal tariff on Chinese-origin goods. It was amended by Executive Order 14259 on April 8, which raised the reciprocal tariff on Chinese-origin goods to 84% and restricted duty-free treatment on small value (de minimis) packages. Then, on April 9, President Trump issued Executive Order 14266, which further amended this framework by raising the reciprocal tariff on most Chinese imports to 125%, citing China’s continued retaliatory measures and national security concerns. The May 12 Order comes after U.S.-China trade negotiations on May 10, in Geneva, resulting in initial steps toward de-escalating the trade war.
Summary of Changes
Suspension of High Reciprocal Tariff Rates: The Order temporarily lowers the Reciprocal Tariff rate from 125% to 10% until August 12 with respect to Chinese-origin goods “entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time (EDT) on May 14, 2025.” U.S. Customs and Border Protection (CBP) has released guidance in connection with the modified Reciprocal Tariff rate for China made pursuant to the Order.
De Minimis Tariff Decrease: The Order reduces the duty rate for imports valued at or under $800 arriving through international mail from China and Hong Kong, previously imposed under Executive Order 14256, from 120% to 54% effective 12:01 a.m. EDT on May 14. Additionally, the alternative $100 per postal item duty remains in effect, and a planned increased to $200 per item on June 1 is deferred unless further action is taken. Accordingly, carriers with postal items of such de minimis value from China or Hong Kong have the option of either paying the ad valorem duty rate of 54% or a flat specific duty rate of $100 per package. In responses to these changes, CBP has released updated guidance for carriers transporting international mail from China and Hong Kong.
China’s Response: China has agreed to suspend all retaliatory tariffs announced since April 4 and to remove or suspend all non-tariff measures imposed against U.S. goods or companies since April 2. This includes both tariffs and other regulatory or administrative actions taken in response to U.S. Reciprocal Tariffs, reportedly including certain recently imposed Chinese export controls. China also committed to engage in continued negotiations aimed at addressing structural trade imbalances and improving bilateral economic relations, with designated representatives from both sides set to meet regularly over the coming 90 days.
What Remains Unchanged
The Order explicitly outlines exemptions and areas unaffected by the tariff modifications:
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The 20% across-the-board tariff imposed on all Chinese imports under Executive Order 14195, as amended by Executive Order 14228, as well as other additional tariffs imposed against China, such as antidumping and/or countervailing duties, and tariffs imposed pursuant to Section 301 of the Trade Act of 1974 or Section 201 of the Trade Act of 1974, remain unchanged.
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The temporary 10% Reciprocal Tariff imposed on goods imported into the U.S. from all other countries, except Canada, Mexico, China, Cuba, Belarus, Russia, and North Korea, pursuant to Executive Order 14266, remain unchanged.
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Goods covered by exceptions in Executive Order 14257 and the Presidential Memorandum of April 11, 2025, continue to be excluded from Reciprocal Tariffs. These include articles subject to 50 U.S.C. § 1702(b), such as donations for humanitarian relief; steel and aluminum articles subject to duties imposed pursuant to Section 232 of the Trade Expansion Act of 1962 (Section 232) and Proclamations 9704, 9705, 9980, 10895, and 10896; automobiles and automobile parts subject to duties under Section 232 and Proclamation 10908; bullion; copper, pharmaceuticals, semiconductors, and lumber; certain energy products; certain minerals not available in the U.S.; all articles potentially subject to future tariffs imposed pursuant to Section 232; goods from Cuba, Belarus, Russia, and North Korea; and any other articles identified in Annex II of Executive Order 14257.
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The duty drawback remains available for Reciprocal Tariffs, allowing importers to recover duties paid on certain imported goods.
Conclusion
The Order represents a calculated move to ease trade tensions with China while maintaining leverage in ongoing negotiations. Companies should use this 90-day period to strategically reassess sourcing decisions, accelerate import activity where possible, and explore opportunities for tariff engineering and duty savings. Businesses should also monitor negotiations closely, as the temporary relief may expire if talks break down. Preparing now can help mitigate potential cost and/or operational impacts that could result from further policy changes in the future.
This alert is intended as a guide only and is not a substitute for specific legal or tax advice. Things are rapidly changing by the day and hour, and our Tariff Task Force will do its best to provide timely and relevant updates as things progress. Please don’t hesitate to reach out to us with questions.
Effective July 1, new legislation will take effect in Virginia imposing further restrictions on the use of covenants not to compete and prohibiting their use for employees who are eligible to receive overtime pay under the Fair Labor Standards Act (FLSA), i.e., non-exempt employees.
Since 2020, Virginia has restricted the use of noncompete agreements for “low-wage employees,” defined as any employee whose average weekly earnings fall below the average weekly wage of the Commonwealth. In 2025, that amount is $1,463.10 per week, according to the Virginia Department of Labor and Industry, or $76,081.20 annually. This number increases annually.
Beginning July 1, the definition of “low-wage employee” will expand to include those employees who, regardless of their average weekly earnings, are entitled to overtime compensation under the FLSA for any hours worked in excess of 40 hours in a workweek. In other words, employers will be prohibited from entering into agreements not to compete with employees classified as non-exempt under the FLSA.
The update to the law is not retroactive, and states that it will not invalidate, alter, or otherwise affect any agreements not to compete entered into or renewed before July 1.
Other provisions of the law remain unchanged. The amended law continues to permit employers to enter into agreements not to compete with any employee whose earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the employer. The definition of “low-wage employee” also continues to include interns, students, apprentices, or trainees employed, with or without pay, to gain work or educational experience, as well as independent contractors who are compensated for their services at an hourly rate that is less than the median hourly wage for the Commonwealth.
Employers must be aware of their obligations under Virginia law, as they can face civil penalties for entering into, enforcing, or threatening to enforce an unlawful agreement not to compete, including a penalty of $10,000 for each violation, and penalties for violating the law’s notice provision (requiring that employers post in the workplace a copy of the law or a summary approved by the Department of Labor and Industry). Additionally, low-wage employees may bring civil actions against any employer that attempts to enforce an unlawful agreement not to compete. In such a case, a court may order the employer to pay liquidated damages, lost compensation, damages, and reasonable attorney fees and costs, as well as injunctive relief.
As July 1 approaches, employers should review how they classify certain positions, confirm whether those positions are exempt or non-exempt under the FLSA, and their existing agreements not to compete, handbooks, policies, offer letters, and other employment agreements to consider whether any action needs to be taken. Please consult a Troutman Pepper Locke attorney with any questions regarding your organization’s obligations under the amended law.
In our latest “FUNDamentals Market Update,” members of our Investment Funds + Investment Management Services group briefly review recent developments, including the SEC’s move towards granting dual share class ETF exemptive relief, current robust activity in joint ventures for real estate asset development despite economic uncertainties, and the increase in lending to funds by institutional investors. This update also looks ahead, including an anticipated rise in continuation funds and secondary transactions due to concerns over interest rates and potential changes to capital gains tax rates, and the potential impact of proposed tariffs on deal-making.
Read the details in the FUNDamentals Market Update.
The Treasury Department has taken initial steps to implement the Trump administration’s “total elimination” policy directed at certain drug trafficking cartels. Most recently, on May 1, Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an alert advising about a rising trend of oil smuggling from Mexico across the U.S. border led by several cartels.
After a number of cartels were recently designated as Foreign Terrorist Organizations (FTOs), companies doing business with Mexico in particular may need to adapt their compliance approaches when it comes to sanctions, money laundering, and related areas. (See our previous alert on this topic.)
This FinCEN advisory underscores that these risks may also be present for purely domestic business within the U.S.
Energy companies such as traders and refiners, as well as financial institutions, should be attentive to suspicious transactions and red flags in trade-related documentation. Companies with potential exposure to this should consider updating their compliance programs and potentially doing a lookback for any past issues.
How the Operation Works
These operations primarily target a Mexican state-owned energy company. Cartels either steal oil or bribe their employees, then transport the stolen oil to storage tanks in cartel-dominated areas in Mexico. From there, the oil is smuggled into the U.S., often disguised as “waste oil” or hazardous materials.
Once in the U.S., the smuggled oil is stored in mobile tanks on vacant lots managed by U.S. companies. Then, they sell the oil at reduced prices, often through brokers, to refineries in Texas and other parts of the U.S., as well as internationally.
Accompanying OFAC Sanctions Actions and Insights
Along with the FinCEN alert, Treasury’s Office of Foreign Assets Control (OFAC) sanctioned three Mexican nationals and two Mexico-based hazardous materials transportation companies linked to the cartel oil smuggling network. In an unusual move, Treasury Secretary Scott Bessent posted a YouTube video about these designations, a signal of the priority the administration places on this effort.
OFAC’s press release states that one of the designated individuals exercises “control over port of entry bridges between the Tamaulipas and Texas border regions,” which allows him to charge fees to “any trucks moving crude into the United States via these routes.” This underscores the pervasive presence of cartel-linked networks in certain pockets of the Mexican — and U.S. — economies. Compliance programs should reflect these government determinations and warnings.
OFAC had previously issued stark findings about the significant presence of the cartels in the oil sector. For example, in September 2024, OFAC sanctioned nine Mexican nationals for similar smuggling activity, along with 26 Mexico-based entities, including 11 gas stations selling stolen fuel and another hazardous materials transportation company.
Takeaways
Companies in the energy sector may need to revisit their sanctions and anti-money laundering compliance approach in order to be comfortable that they are not becoming involved in these smuggling schemes — or in any other cartel-linked business activity that may not yet have been targeted by the U.S. government. Given the high political priority of this effort, one should expect a continued drumbeat of designations and advisories, and eventually enforcement actions, aimed at the full scope of cartel-linked business on both sides of the border.
Financial institutions and companies in the energy sector should be alert for higher-risk or unusual profiles of traders or other smaller oil suppliers, transportation companies, and the like, as well as trade documentation that may have signs of falsification, which was one of the hallmarks of the scheme highlighted by FinCEN.
California’s drive toward a net-zero carbon economy by 2045 is sparking innovative solutions to harmonize environmental conservation with infrastructure development. Assembly Bill (AB) 550, sponsored by Assembly Member Petrie-Norris, aims to amend the California Endangered Species Act (CESA) by permitting renewable energy projects to take unlisted but “at-risk” species. The proposed legislation recognizes the dual imperative of advancing clean energy while conserving California’s biodiversity.
Historically, the California Department of Fish and Wildlife (CDFW) has been unable to authorize the take of unlisted species without a lengthy Natural Communities Conservation Plan. At least one appellate court invalidated efforts by CDFW to provide advance take authorization for unlisted species through a CESA §2081 incidental take permit. In Environmental Protection and Information Center v. California Dept. of Forestry and Fire Protection (2008) 44 Cal.4th 459, 507 (EPIC), the California Supreme Court noted the Court of Appeal concluded CDFW could not include unlisted species in a §2081 incidental take permit, and that the permittee would have to seek new permits if and when the unlisted species became listed. The EPIC case underscored the limitations within the existing CESA framework, highlighting the need for legislative intervention to address the evolving needs of conservation and development.
AB 550 addresses this limitation by explicitly allowing CDFW to issue CESA §2081 incidental take permits that include unlisted, “at-risk” species for renewable energy projects. This would provide renewable energy developers with greater certainty that their projects will not experience delays during construction and that future operations will not be curtailed if and when new species are listed. This increased certainty will facilitate financing for the development of such projects. The bill would also provide renewable energy projects with the ability to use CDFW-approved scientific research projects as mitigation. This recognizes that renewable energy projects can themselves contribute to species conservation.
As California strives to meet housing, and other demands without compromising vulnerable species, AB 550 might pave the way for similar strategies in housing and other critical infrastructure sectors. The bill leaves some questions unanswered, such as the timing of mitigation measures for unlisted species, but its success could inspire broader applications in balancing development with conservation.
A receivership is an equitable remedy in which an independent third party is appointed by a court to manage and preserve a company’s assets. Though bankruptcy and receiverships are similar, there are significant differences between the two insolvency proceedings.
This article will discuss the key differences between bankruptcy and receivership and what those differences mean from the perspective of a creditor. To access this article and read other insights from our Creditor’s Rights Toolkit, please click here.
This article was originally published in the May 2025, Issue 2 of The Trade Mark Lawyer – INTA Special Edition.
Giovanni Visintini, counsel at Troutman Pepper Locke, reviews the critical role and complexities of survey evidence highlighted by the recent Abbott Diabetes Care Inc v. Sinocare Inc & Ors case, showcasing how improper methodology can turn a potentially valuable asset into a significant liability.
Regulatory Oversight Blog
Make sure to visit Troutman Pepper Locke’s Regulatory Oversight blog to receive the most up-to-date information on regulatory actions and subscribe to our mailing list to receive a monthly digest.
Regulatory Oversight will provide in-depth analysis into regulatory actions by various state and federal authorities, including state attorneys general and other state administrative agencies, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). Contributors to the blog will include attorneys with multiple specialties, including regulatory enforcement, litigation, and compliance.
Troutman Pepper Locke Spotlight
Troutman Pepper Locke’s Gene Fishel Named a ‘Go To Lawyer’ in Cybersecurity Litigation by Virginia Lawyers Weekly
RICHMOND – Samuel E. “Gene” Fishel, a member of Troutman Pepper Locke’s Regulatory Investigations, Strategy and Enforcement (RISE) Practice, was recently named to Virginia Lawyers Weekly’s “Go To Lawyers” 2025 list for cybersecurity litigation. The program recognizes top lawyers across the commonwealth in a given practice area based on nominations and an independent selection process.
Podcast Updates
Solicitors General Insights: A Deep Dive With Mississippi and Tennessee Solicitors General
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In this episode of our special Regulatory Oversight: Solicitors General Insights series, Jeff Johnson, a former deputy solicitor general in the Missouri Attorney General’s office, welcomes Scott Stewart, solicitor general of Mississippi, and Matt Rice, solicitor general of Tennessee. The episode uncovers the intricacies of being a state solicitor general and the impact of their work on state and national levels.
Leadership and Innovation at the Illinois AG’s Office
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In this episode of Regulatory Oversight, Stephanie Kozol and Chuck Slemp welcome Illinois Attorney General (AG) Kwame Raoul and Chief Deputy AG Brent Stratton. Raoul and Stratton share their career inspirations, unique journeys into politics, and the challenges they have faced in their political endeavors.
Inside Maine’s AG Office: AG Aaron Frey on Public Service
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In this episode of Regulatory Oversight, Stephanie Kozol and Chuck Slemp welcome Maine Attorney General (AG) Aaron Frey to discuss the unique aspects of the Maine Office of the AG. The conversation begins with Frey sharing his personal background and motivations for entering public service, before delving into the distinctive process of electing the AG in Maine.
DOJ Updates
Recent DOJ Intervention Highlights FCA Use Against Customs Fraud
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With the Trump administration’s new tariffs, some companies may be looking for ways to compensate for increased costs of imports. Companies operating in the international supply chain must be aware that any attempts to circumvent heightened duties may draw unwanted attention from the Department of Justice (DOJ) and/or whistleblowers through False Claims Act (FCA) enforcement. A recent complaint the DOJ filed in the Eastern District of California demonstrates how the DOJ and/or whistleblowers can use the FCA to pursue customs fraud.
DOJ’s Latest Guidance on the Data Security Program – What’s New?
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The new Department of Justice (DOJ) Data Security Program (DSP) took effect on April 8. For an overview of the DSP, see our earlier advisory and recent update.
New DOJ National Security Division Data Security Rules Take Effect on April 8: Is Your Organization Exposed?
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What’s Happening?
Under the Department of Justice’s (DOJ) “Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern or Covered Persons” rules (the Rules), allowing access outside the United States to certain types of sensitive personal data involving “countries of concern” may be restricted or prohibited beginning on April 8. See our previous advisory for more detail.
Privacy Updates
$51.75M Settlement in Clearview AI Biometric Privacy Litigation Illustrates Creative Resolution for Startups Facing Parallel Litigation and Enforcement Action
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Introduction
On Thursday, March 20, a federal judge in the Northern District of Illinois granted final approval to a settlement agreement under which Clearview AI (Clearview) agreed to pay an estimated $51.75 million to a nationwide class if one of several contingencies takes place. This approved settlement agreement resolves In Re: Clearview AI, Inc. Consumer Privacy Litigation, No. 1:21-cv-00135 (N.D. Ill.), a multidistrict suit alleging that the company’s automatic collection, storage, and use of biometric data violated various privacy laws, including Illinois’ Biometric Information Privacy Act (BIPA). The unorthodox settlement not only preserves Clearview’s business model, but may also insulate Clearview from subsequent or parallel regulatory investigations without requiring the company to jeopardize the liquidity necessary for continued growth. Ultimately, this settlement seems to represent a good outcome for the company, especially in light of the fact that that it was achieved over the objections from 23 state attorneys general (AG). U.S. District Judge Sharon Johnson Coleman stated that the settlement is fair, reasonable, and adequate.
California AG Announces Investigative Sweep Targeting Geolocation Data
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On March 10, California Attorney General (AG) Rob Bonta announced an investigative sweep of the location data industry for potential noncompliance with the California Consumer Privacy Act (CCPA).
State AGs and the FTC Warn of 23andMe Risks Following Bankruptcy Announcement
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Several state attorneys general (AGs) and the Federal Trade Commission (FTC) have begun scrutinizing ancestry tracking company 23andMe following its recent announcement that it has filed for Chapter 11 bankruptcy. As part of these efforts, the AGs have issued alerts on ways consumers can exercise their rights under state privacy laws, and the FTC has issued letters stressing potential risks to U.S. bankruptcy trustees. 23andMe, which was founded in 2006, has collected DNA and associated genetic material on seven million American customers to provide information related to those customers’ ancestry.
Consumer Protection Updates
FDA’s New Lead Guidelines: A Milestone for Safer Baby Foods
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In recent years, the safety of baby food has become a top priority for state attorneys general (AG) and federal agencies. In April 2021, the U.S. Food and Drug Administration (FDA) announced its “Closer to Zero” plan to “reduce dietary exposure to contaminants to as low as possible, while maintaining access to nutritious foods.” However, multiple coalitions of state AGs have been vocal in advocating for more stringent and urgent measures. Over the last four years, these coalitions have urged the FDA to take decisive action to ensure the safety of baby food products, particularly as it relates to the presence of toxic metals. In January 2025, the FDA issued final guidance setting action levels for lead in processed foods intended for babies and young children under the age of two.
Mass. AG Emerges as Key Player in Consumer Protection
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Published in Law360 on April 4, 2025. © Copyright 2025, Portfolio Media, Inc., publisher of Law360. Reprinted here with permission.
Massachusetts Attorney General Andrea Campbell has emerged as a significant figure in the landscape of consumer protection and corporate accountability. Her actions and initiatives have positioned her as a thought leader among state attorneys general, particularly in the context of national efforts to safeguard consumer rights.
Gaming Updates
Lone Star Crackdown: Amid a Patchwork of State Regulations, Texas Moves to Ban Lottery Courier Services
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In a significant regulatory shift, the Texas Lottery Commission has enacted an immediate ban on lottery ticket courier services in the state, effective February 24. This decisive move marks a stark departure from the commission’s previous position that it lacked jurisdiction over these couriers. State officials in Texas backing the change assert that groups who buy mass quantities of lottery tickets using unregulated lottery couriers avoid safeguards in the regulatory system and undermine public trust in the lottery system.
Single State AG Enforcement Updates
Crypto Investment Firm Agrees to Pay New York AG $200M to Resolve Market Manipulation Allegations Regarding Sale of Failed Token
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On March 24, cryptocurrency investment firm Galaxy Digital Holdings (Galaxy) entered into an assurance of discontinuance (AOD) with New York Attorney General (AG) Letitia James to resolve allegations that Galaxy engaged in misrepresentations when it promoted the failed algorithmic cryptocurrency Luna from 2020 to 2022.
Rhode Island AG Targets Real Estate Management and Development Firm for Alleged Unfair and Deceptive Acts and Practices
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In mid-April, Rhode Island Attorney General (AG) Peter F. Neronha announced a settlement with A.R. Building Company, Inc. (ARBC), a national real estate management and development business with properties throughout Rhode Island. The settlement resolved allegations of unfair trade practices with respect to prospective tenants.
Massachusetts AG Indicts Health Care Providers and Owners for Submission of Allegedly False Medicaid Claims
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The Office of Massachusetts Attorney General (AG) Andrea Campbell announced the criminal indictment of several Massachusetts-based health care providers and their owners in connection with allegedly false claims they submitted to the Massachusetts Medicaid program, MassHealth. In what Campbell characterized as a fraud and kickback arrangement, the defendants submitted more than $7.8 million in false claims for reimbursement associated with urine drug tests and home health services that were not provided, not medically necessary, or not properly authorized.
Florida AG Settles Alleged Moving Brokerage Scheme, Banning Defendants and Securing $4M in Judgments
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On March 21, Florida Attorney General (AG) James Uthmeier’s Consumer Protection Division announced the resolution of ongoing litigation against a network of moving brokerage companies accused of misleading consumers. These companies, including Gold Standard Moving and Storage, allegedly misrepresented their services by claiming to offer professional, door-to-door moving services when they were operating as brokers, quoting low prices to secure large up-front deposits and then outsourcing the moving tasks to unvetted third-party carriers. According to the AG’s office, this practice frequently led to consumers allegedly facing additional and unexpected costs.
Cannabis Regulatory Updates
Testing Turmoil: The Legal and Business Implications of Inconsistent Cannabis Testing Standards
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This article was originally published in Reuters and Westlaw Today on April 25, 2025.
Cannabis businesses operating in state-legal markets face a patchwork of testing requirements that vary from one jurisdiction to another. In the absence of federal oversight, each state has developed its own testing rules, including for licensing labs, required contaminants to test for, sampling procedures, and allowable remediation of contaminated products.
Indiana AG Pushes Back on THC Legislation
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On April 21, Indiana Attorney General (AG) Todd Rokita issued a letter to state legislators addressing the pressing issue of legal loopholes surrounding intoxicating hemp-derived products containing delta-8 THC, delta-10 THC, or HHC. These products have garnered significant attention due to their psychoactive effects similar to Delta-9 THC, the primary compound in marijuana. In 2023, Rokita issued an official opinion concluding that these types of products are currently illegal in Indiana. Rokita’s letter discusses the proposed Senate Bill 478, which, among other things, seeks to regulate craft hemp, craft hemp flower products, and THC. Rokita concluded that the proposed bill would make these products legal, does not meaningfully regulate them, and encourages the legislature to reconsider the legislation.
Whistleblower Lawsuit Against METRC Raises Significant Compliance and Accountability Concerns for the Legal Cannabis Industry
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METRC, Inc., the predominant provider of seed-to-sale tracking software used by state regulatory bodies overseeing legal cannabis markets across the U.S., faces serious allegations detailed in a recent lawsuit filed in Oregon. The lawsuit, brought by a former executive at METRC, accuses the company of whistleblower retaliation and wrongful termination under Oregon law. Central to the plaintiff’s complaint are allegations that METRC knowingly ignored substantial compliance violations within its tracking systems in California, potentially facilitating illegal diversion of cannabis products. The litigation raises critical concerns for cannabis regulatory compliance, not only in Oregon and California but also in the 25 other jurisdictions that rely on METRC’s systems.
Stephanie Kozol, Senior Government Relations Manager – State Attorneys General, also contributed to this newsletter.
Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.
This article was originally published on May 5, 2025 on Law360 and is republished here with permission.
This article is part of a monthly column that connects popular culture to hot-button labor and employment law issues. In this installment, we discuss a recent debate over whether cast members on reality television series “Love Is Blind” should be classified as employees.
A significant, high-visibility industry — reality television — has reignited the debate over what is considered to be work.
In Delirium TV LLC and Kinetic Content LLC, the National Labor Relations Board claimed in December that the producers of the reality series “Love Is Blind” misclassified cast members as nonemployee participants, thereby inhibiting them from engaging in concerted activity and depriving them of protections under the National Labor Relations Act.
In July, prior to the “Love Is Blind” debate, the California Supreme Court ruled unanimously in Castellanos v. State of California that app-based ride-hailing and delivery services companies can continue to classify their drivers as independent contractors rather than employees, ending a lengthy legal battle between labor unions and tech companies over the classification of app-based service workers in the state.
However, the Delirium TV case brings this issue back into the spotlight and provides lessons for employers in all industries and jurisdictions about how best to structure independent contractor relationships.
The Reality Behind Reality TV
“Love Is Blind” is a Netflix reality show — the most recent season of which premiered in February — that is promoted as a social experiment where single people look for love and get engaged all before they ever meet in person.
The contestants date in so-called pods for 10 days and only meet face-to-face after accepting a proposal, which is then followed by a tropical couples retreat.
After the retreat, the couples return home and live together in an apartment complex. They meet their partner’s friends and family, integrate into each other’s lives, and plan a wedding, which is held — believe it or not — at the end of four weeks.
During filming, the contestants are classified as independent contractors and are paid a stipend of $1,000 per week for the first two weeks, and $1,000 per week for each week thereafter, up to an $8,000 cap.
As a condition of participation, they sign an agreement providing that they understand and acknowledge that they “may be required to participate in production-related activities for six (6) to seven (7) days a week, for up to twelve (12) hours per day and up to sixty (60) hours per week (which may include Saturdays and Sundays).”
The NLRB filed a complaint against Delirium TV and Kinetic Content based on the investigation stemming from unfair labor practice charges filed by contestants Renee Poche and Nick Thompson through the Unscripted Cast Advocacy Network Foundation, claiming the company misclassified the cast as nonemployee participants instead of employees.
While the NLRB’s complaint does not fully explain its reasoning, it appears to rely heavily on the participant agreements, which detailed a high level of direction and control over the cast members’ conduct.
According to Thompson and Poche, participants signed strict agreements that included broad confidentiality clauses, $50,000 in penalties for leaving the show without approval and bans on media appearances.
The producers even filed a $4 million arbitration claim against Poche for allegedly violating her contract’s nondisclosure clause.
The Test for Independent Contractor Status Under the NLRA
The NLRA defines “employee” to exclude independent contractors, which means that independent contractors are not able to unionize under the NLRA and that they lack other protections typically afforded to employees.
In 2019, during President Donald Trump’s first term, the NLRB determined in SuperShuttle DFW Inc. that a worker’s “entrepreneurial opportunity” was the most important factor in determining whether they were properly classified as an independent contractor.
In a 2023 decision in The Atlanta Opera Inc., former President Joe Biden’s NLRB held that it would consider a worker’s entrepreneurial opportunity along with all other aspects of the relationship in determining independent contractor status under the NLRA, with no one factor being more important or determinative than another. This multifactor test made it more difficult for a worker to be classified as an independent contractor.
Under the current administration, we anticipate that the NLRB will likely revert to the more independent contractor-friendly test from Trump’s first term.
Other Tests for Determining Contractor Classification
The NLRB’s test is not the only test for determining independent contractor classification. The U.S. Department of Labor has a test as well, and that test has also changed depending on who is in the White House.
During Trump’s initial term, the DOL made it easier for employers to classify workers as independent contractors, setting forth a rule that emphasized two key factors to determine independent contractor status: (1) the degree of the company’s control over the manner and means by which the individual performs the work; and (2) the individual’s opportunity for economic gain or loss.
Under the Biden administration in 2024, the DOL rescinded the Trump-era DOL’s independent contractor rule and replaced it with a six-factor test focused on the following:
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The worker’s opportunity for profit or loss depending on their managerial skill;
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The individual’s and the company’s relative investments in the business;
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Whether the relationship was permanent;
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The nature and degree of the company’s control over the individual;
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The extent to which the company considers the individual’s work to be an integral part of its business; and
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The individual’s skill and initiative.
In the first few days of his current term, Trump moved to delay a hearing pending in the U.S. Court of Appeals for the Fifth Circuit in Frisard’s Transportation LLC v. DOL, challenging the 2024 rule and signaling that he will be revisiting Biden’s six-factor test.
In addition to federal tests for independent contractor classification status, states have varying rules for whether workers are properly classified. Most states use a multifactor test to determine classification.
However, a few states, like California, have adopted the more restrictive ABC test, which examines three factors, each of which must be met. If any one factor of the test fails, the worker is classified as an employee.
The factors of California’s ABC test are as stated:
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The individual is free from the company’s direction and control when performing the work;
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The work performed by the individual is outside the usual course of the company’s business; and
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The individual is customarily engaged in an independently established business that is of the same nature as the work that the individual is performing for the company.
Other states, such as New Jersey, have adopted a modified version of the ABC test where Part B provides that the work must either be outside the company’s usual course of business, or it must be performed outside all of the company’s places of business.
Because of the varying tests for independent contractor classification, employers operating in multiple states face an added layer of risk, as a business model that is compliant in one jurisdiction may not hold up in another.
Understanding Liability
Misclassifying independent contractors can result in steep financial consequences. Employers may face liability for unpaid wages, overtime, benefits and taxes, along with penalties from both federal and state agencies.
What makes the issue especially challenging is that liability can come from multiple sources, including government audits, private lawsuits and enforcement actions. These costs can add up quickly.
Yet few companies voluntarily reclassify contractors as employees unless the original classification is especially weak. Rather, most prefer to enhance compliance within the existing model rather than risk sending a signal that could invite litigation or unsettle contractor relationships.
The key to reducing risk is to proactively review any agreements between the company and the worker, as well as the actual working relationship in practice.
A thorough compliance review typically involves evaluating dozens of factors, identifying areas of concern and making changes that align business goals with legal requirements.
Instead of reclassifying workers, which can signal past misclassification and prompt legal action, many companies choose to improve their current independent contractor models. This allows them to retain flexibility while reducing the chance of a legal challenge and strengthening their position if one occurs.
Why it Matters: Rights at Stake
The distinction between contractor and employee status has serious consequences, as Thompson and Poche made clear.
Employees enjoy legal protections such as minimum wage, overtime, the right to speak out about working conditions and the right to organize. Independent contractors do not enjoy those protections.
According to Thompson and Poche, many of those rights were stripped from cast members through the strict participant agreements they signed.
Ironically, the producers followed what many companies assume is best practice by using written contracts. But instead of protecting them, the contracts may serve as evidence of misclassification.
Ultimately, what matters most is not what is in the contract, but how the relationship works in practice. Courts and agencies look at the day-to-day reality of the relationship.
If the producers dictated when contestants filmed, how they behaved and what they said, that could tip the scale toward employee classification.
A Shifting Legal Landscape and the Future of Reality TV
Will reality television change because of these lawsuits? That remains to be seen. But if the producers treat this as a compliance opportunity, they have options.
For example, they can restructure the agreement to provide participants with better working conditions and more freedom over the manner and means of their participation.
In fact, the producers have already deleted one controversial clause, which had provided for a $50,000 penalty for contestants who left the show early.
If the board rules that the participants are employees, they will be entitled to minimum wage and overtime pay, as well as meal and rest breaks under California law, and will have the right to organize.
Ultimately, there are ways to restructure the relationship without losing creative control.