What Employers & Plan Fiduciaries Must Know About Recent DEA Marijuana Rescheduling Orders and Hearings Considering Broader Marijuana Rescheduling

July 27, 2026

July 27, 2026

U.S. employers should reassess their existing policies on workplace drug use and testing and disability accommodation decision-making for Federal Drug Administration (“FDA”)-approved and state licensed medical use of marijuana in response to Drug Enforcement Agency (“DEA”) rescheduling orders under the Controlled Substances Act (“CSA”) implemented last April while closely monitoring for DEA action on a DEA proposal to reclassify marijuana from a Schedule I to a Schedule III substance under the CSA.  The proposed marijuana rescheduling would significantly affect the consequences of marijuana use by individuals in the United States, including the testing and consequences of marijuana use under Department of Transportation (“DOT”) and other federal drug testing mandates.

Where the Rescheduling Stands Today

The recently completed ALJ hearing traces back to a Notice of Proposed Rulemaking published May 21, 2024, proposing to move marijuana from Schedule I to Schedule III of the CSA. After more than a year of procedural DEA delay holding hearings or taking other material action on the proposed rule, President Trump’s December 18, 2025 executive order directed the Attorney General to expedite completion of the rulemaking. In response, on April 23–24, 2026, Acting Attorney General Todd Blanche issued a final order that:

  • immediately moved FDA-approved marijuana drug products into Schedule III;
  • immediately moved marijuana subject to a qualifying state medical marijuana license into Schedule III; and
  • simultaneously ordered a new, expedited DEA administrative hearing to evaluate the broader question of whether marijuana generally — not limited to FDA-approved or state-licensed medical products — should move from Schedule I to Schedule III. See DOJ Office of Public Affairs release; DEA Marijuana Rescheduling Regulatory Actions page.

That broader hearing opened June 29, 2026 at DEA headquarters in Arlington, Virginia, before Chief ALJ Derek C. Julius, ran (with a recess for the July 4th holiday period) through mid-July, and formally concluded on July 15, 2026 following closing presentations from a group of participating states. See DEA press release; Notice of Hearing, 91 Fed. Reg. 22777 (Apr. 28, 2026). Because DEA and DOJ are the proponents of the rule, the hearing’s structure permitted testimony only from designated participants opposing rescheduling — including Smart Approaches to Marijuana (SAM), the National Drug & Alcohol Screening Association, and the States of Nebraska, Idaho, Indiana, Louisiana, and Tennessee (through its Bureau of Investigation), among others. Pro-reform organizations including NORML sought and were denied participant status. ALJ Julius also ordered that the hearing would not be televised, livestreamed, or otherwise broadcast, limiting observation to in-person attendance.

With the evidentiary record now closed, ALJ Julius set August 17, 2026 as the deadline for designated parties to file optional post-hearing briefs (up to 50 pages each, one per party), after which he will prepare his findings and recommendation for the DEA Administrator. See Order for Transcript Corrections and Post-Hearing Briefs, In re Schedules of Controlled Substances: Proposed Rescheduling of Marijuana (DEA July 16, 2026). Particularly given President Trump’s expressed support for expanding access to medical marijuana, many might assume this rapidly approaching deadline signals a decision on the proposed rescheduling is near. It bears noting, however, that neither the ALJ’s recommendation nor the Administrator’s subsequent final decision is bound by any deadline. Following the DEA’s previous 1980s cannabis rescheduling proceeding, the ALJ took roughly two years to issue a recommendation that the Administrator then rejected outright, a rejection the D.C. Circuit ultimately upheld. See Alliance for Cannabis Therapeutics v. DEA, 15 F.3d 1131 (D.C. Cir. 1994).

As if this ambiguity isn’t enough, the Acting Attorney General’s April 2026 final order reclassifying to Schedule III FDA-approved and state licensed marijuana now faces legal challenges such as the one brought by Smart Approaches to Marijuana and the National Drug & Alcohol Screening Association, see SAM Inc., et al. v. U.S. Department of Justice, et al., No. 26-1106 (D.C. Cir., petition filed May 4, 2026), and another brought by the Attorneys General of Indiana and Nebraska, see Nebraska, et al. v. U.S. Department of Justice, et al., No. 26-1130 (D.C. Cir., petition filed May 22, 2026).  While the fate of these consolidated challenges awaits resolution by the U.S. Court of Appeals for the D.C. Circuit, employers and health plans must deal with the currently effective policy change that, for now, has made a Schedule I drug FDAA-approved medical and state-licensed marijuana.

Pending the resolution of challenges to the currently effective change of FDA-approved medical and state licensed marijuana and DEA action on its broader rescheduling proposal, however, employers and plan sponsors should review their existing marijuana use and testing policies for the already effective FDA approval of FDA-approved marijuana drug products and marijuana subject to a qualifying state medical marijuana license that took effect under the final rescheduling orders issued by Acting Attorney General Todd Blanche on April 23–24, while continuing to monitor the Federal Register and other FDA and Congressional comments and actions signaling when and the likely direction the FDA intends to take on the broader proposal to reschedule marijuana generally from Schedule I to Schedule III.

What Already Changed — Independent of the Proposed DEA Rescheduling Rule Change

It is important for compliance purposes to separate what is already final from what remains pending:

Already in effect (April 2026 Final Order)

  • FDA-approved marijuana-containing drug products are in Schedule III.
  • Marijuana handled under a qualifying state medical marijuana license is in Schedule III, with a new expedited DEA registration pathway for state licensees.
  • State-licensed medical marijuana businesses are relieved of the Internal Revenue Code § 280E deduction disallowance, which applies only to Schedule I and II trafficking.
  • Recreational/adult-use marijuana, unlicensed marijuana, and synthetically derived THC remain in Schedule I and are unaffected by the April order.

Still pending (record closed; awaiting ALJ recommendation and DEA final decision)

  • Whether marijuana as a category — including adult-use/recreational marijuana not tied to an FDA-approved product or state medical license — moves to Schedule III.
  • The government has been explicit throughout that this proceeding is not about legalizing recreational use; it concerns whether marijuana has a “currently accepted medical use” sufficient to satisfy the CSA’s scheduling criteria.
  • Post-hearing briefs are due August 17, 2026; the ALJ’s recommendation and DEA’s final decision will follow on an unannounced timeline.

Why This Matters for Employers — and Why It Doesn’t Change as Much as Headlines Suggest

A move from Schedule I to Schedule III would be historically significant, but it would not legalize recreational marijuana use, and it would not, by itself, require employers to change drug-free workplace policies. Marijuana would remain a controlled substance requiring a valid prescription for lawful use under federal law; unauthorized possession or use would remain a federal offense. HR and employment counsel should calibrate client and internal expectations accordingly while continuing to monitor the following areas:

Drug testing and drug-free workplace policies

The scheduling change could impact your current workplace drug use and drug testing policies by expanding legally permitted use and requiring the collection of added documentation for those claiming permitted use. Employers, insurers and others concerned about impairment by workers consuming marijuana in accordance with its new scheduling will need to consider the need for and advisability of adopting policies tailored to their concerns and ensuring their testing and other administrative practices meet applicable legal requirements.

For purposes of this analysis, the changes adopted last April can make medicinal use in accordance with FDA-approved or state-licensed uses legal in the applicable workplace jurisdiction. However, the proposed schedule III classification would not convert a positive marijuana test into evidence of lawful drug use in the ordinary case, since off-label recreational use would remain unauthorized under federal law absent a valid prescription.

Employers should nonetheless review testing panels, medical review officer (MRO) protocols, and policy language for currency, and confirm policies still align with applicable state law, which increasingly diverges from federal scheduling on off-duty use protections.

DOT and other safety-sensitive/federally regulated testing

The recently adopted and additional proposed rescheduling of marijuana to a Schedule III classification are unlikely to change U.S. Department of Transportation drug testing requirements, as its 49 C.F.R. Part 40 rules operate independently of CSA scheduling. DOT has previously confirmed that rescheduling marijuana would not, by itself, change safety-sensitive testing requirements. Employers with DOT-covered or other federally regulated safety-sensitive positions should watch for any DOT or agency-specific guidance issued in response to a final rescheduling decision. Nevertheless, the rescheduling likely foreseeably could encourage even broader unauthorized use by employees or others reading the rescheduling as eliminating prohibitions, reflecting a further decline in enforcement, or both.

ADA and disability-related considerations

The recent DEA rescheduling of FDA-approved use of medicinal marijuana to a Schedule I drug classification will expand legally available options for medicinal marijuana use by employees in accordance with appropriately prescribed and used medicinal marijuana. Also, forty states now authorize medical marijuana under state law, many with employment protections for off-duty medical use that already operate independently of federal scheduling. Federal rescheduling will not harmonize this patchwork, and multistate employers should continue maintaining state-by-state policy matrices rather than assuming a federal fix is coming.

These changes can create new Americans with Disabilities Act (“ADA”) implijcations by, among other things:

  • Requiring employers to consider requests for accommodation of medically prescribed marijuana by broadening the availability and medicinal use of FDA-approved and state-licensed medicinal marijuana. Rescheduling does not change the ADA’s treatment of current illegal drug use as outside the definition of a protected disability while such use continues.
  • Requiring employers to consider the convergence between ADA’s mental/psychological impairment prong and MHPAEA parity classification issues when designing substance use disorder treatment benefits — a distinct analysis from current-use accommodation questions, and one worth continuing to track alongside this rulemaking.

Health and welfare plan sponsors and fiduciaries

The reclassification of FDA-approved medicinal marijuana also can create new design questions for health and disability benefit plan sponsors and claims and appeals health challenges for health and disability plan fiduciaries. For instance,

  • Health, AD&D, disability, life and other benefit plan sponsors and fiduciaries should recognize that the rescheduling adopted last April expands the legally allowed prescription and use of marijuana.
  • While Schedule III status does not itself create a coverage mandate, the approval could affect how FDA-approved uses are treated by removing exclusions or rules that previously denied coverage based on their more restricted DEA Schedule III status. While formulary and coverage decisions for any FDA-approved cannabinoid product remain a plan design and medical-necessity determination for the plan sponsor and its PBM or other fiduciaries, previously relied upon exclusions may no longer operate in the same way to restrict coverage.
  • Plan sponsors, their prescription benefit managers, insurers and other service providers should reevaluate current formularies and coverage provisions and exclusions for MHPAEA and other implications. They also should watch the FDA approval pipeline for cannabinoid drug products for potential formulary impact, should evaluate the need for changes in coverage or benefit exclusions and added fiduciary or other risks relating to benefit coverage and limitations potentially impacted by marijuana use. Health, disability, accident and dismemberment, and life insurance plan fiduciaries and insurers should use care to consider prudently the potential implications of rescheduling on any claims or appeals including special concerns and considerations likely to arise with respect to health benefits impacted byh MHPAEA. Fiduciaries should use care to coordinate any MHPAEA comparative analysis work touching substance use disorder benefits with counsel already tracking that parity exposure.

Cannabis-industry and cannabis-adjacent employers

State-licensed medical marijuana operators already qualify for § 280E relief under the April 2026 order; HR and finance functions at these employers should confirm payroll tax treatment reflects the change and monitor the expedited DEA registration pathway for state licensees.

Recommended Action Items

For HR and Employment Counsel

  • Review (but do not overhaul) drug-testing and drug-free workplace policies now; hold substantive revisions pending a final DEA decision, which — with post-hearing briefs not even due until August 17 — remains months away at minimum.
  • Confirm state-law policy variations are current, independent of the federal rescheduling timeline.
  • Flag DOT-covered positions for a separate compliance check once DOT issues any post-rulemaking guidance.

For Health, AD&D, Disability and & Other Welfare Plan Sponsors and Fiduciaries

  • Task PBM and plan counsel with monitoring FDA’s cannabinoid drug approval pipeline for formulary implications.
  • Coordinate substance use disorder benefit design review with pending MHPAEA comparative analysis obligations.

For General Counsel and Risk Management

  • Track the consolidated D.C. Circuit challenges to the April 2026 Final Order alongside the ALJ’s post-hearing process; a reversal on appeal could unwind the medical/state-licensed rescheduling already in effect.
  • Maintain rescheduling-tracking analysis as privileged work product where prepared to inform litigation or enforcement-risk posture.

For State-Licensed Medical Marijuana Employers

  • Confirm § 280E tax treatment has been updated and pursue the expedited DEA registration pathway using existing state licensure as supporting evidence.

Stay Tuned and Share Your Input

While the DEA’s proposed rescheduling is a self-initiated proposal, the ALJ’s post-hearing recommendation and what action, if any, the DEA ultimately will take on its proposal to reschedule marijuana more broadly remain uncertain. Although the DEA hearing on the proposed ruling is complete, communications to the DEA and Congress still offer opportunities to influence the direction and outcome of these decisions. Concerned employers and others should consider communicating any input or concerns to the DEA and Congress promptly to ensure their input receives consideration. Meanwhile, employers, health and disability plans and other interested parties should reevaluate their policies in response to the already adopted rescheduling as they monitor for future developments.

For Help or More Information

The author of this update, Cynthia Marcotte Stamer is an attorney Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization with decades of experience advising and assisting health industry and other employers to design, audit, and defend their employment and other risk management and compliance practices, including conducting audits and investigations, designing and updating compliance and risk management programs, responding to government investigations, conducting transaction, governance, and other due diligence, and assisting with other legal and operational compliance and risk management and legislative and regulatory affairs. She is available to assist your organization in assessing the impact of these developments and navigating the compliance and strategic steps that follow. For more information about these concerns or Ms. Stamer, contact Ms. Stamer via e-mail or via telephone at (214) 452 -8297.

About the Author

Cynthia Marcotte Stamer is an American College of Employee Benefits Counsel and a Martindale-Hubble “AV-Preeminent” (Top 1%) attorney and advisor board certified in labor and employment law by the Texas Board of Legal Specialization peer peer celebrated as “Top Rated Lawyer” and “LEGAL LEADER™ “Top Rated Lawyer” and “Best Lawyer” for her work in ERISA & Employee Benefits Law, Health Care Law, Labor and Employment Law, and Business and Commercial Law.

Nationally recognized for her decades of leading-edge workforce, health and other employee benefits and insurance, compensation, regulatory affairs and compliance, and other management work, public policy leadership and advocacy, coaching, teachings, and publications, she is the publisher of Solutions Law Press, Inc.® practitioner-focused compliance publications for employers, plan sponsors, HR professionals, health care, insurance, technology and data industry leaders, and legal counsel and risk management advisors.

Along with these activities, Ms. Stamer also has earned national recognition for her authorship of thousands of highly regarded works, presentations as a knowledgeable speaker, testimony and other input of regulators and legislators, and media interviews on health and other benefits, human resources and other workforce, health care, insurance, data privacy and security and other related concerns. 

For more information about Ms. Stamer, engaging her services or to speak, her work, credentials, experience and involvements, or other matters, see the About the Author page, her website at www.cynthiastamer.com, or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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Posted by Cynthia Marcotte Stamer

Hidden Personal Relationships Can Become Costly Business Risks: Lessons for Employers from Recent Federal Bankruptcy Proceedings

July 14, 2026

The recent recommendation by a federal bankruptcy judge approving settlements in proceedings in In re Professional Fee Matters Concerning the Jackson Walker Law Firm requiring the Jackson Walker law firm to return millions of dollars in professional fees serves as an important reminder that undisclosed personal relationships can create significant legal, financial, governance, and reputational risks for organizations.

The recommendations in In re Professional Fee Matters Concerning the Jackson Walker Law Firm arose after it was revealed that former Jackson Walker bankruptcy partner Elizabeth Freeman had engaged in a long-term romantic relationship with then-Chief U.S. Bankruptcy Judge David R. Jones while Jackson Walker regularly appeared before him in major Chapter 11 cases. Although federal bankruptcy law and Federal Rule of Bankruptcy Procedure 2014 require professionals seeking employment by a bankruptcy estate to disclose connections that could bear on their disinterestedness or present an appearance of a conflict, the relationship was not disclosed to parties or the court while Jackson Walker sought and received approval of millions of dollars in fees. After the relationship became public in 2023, the United States Trustee moved in numerous bankruptcy cases to vacate fee orders and seek disgorgement or other relief, alleging that the firm’s nondisclosure deprived the bankruptcy courts and parties of information material to evaluating the firm’s eligibility for employment and compensation. Those proceedings were consolidated before the U.S. District Court for the Southern District of Texas, which referred various issues to the bankruptcy court, ultimately resulting in recommendations approving negotiated settlements requiring Jackson Walker to return millions of dollars in fees while preserving unresolved issues concerning additional fee applications and other requested relief. 

While the underlying matter arose in a bankruptcy proceeding, the governance lessons apply broadly to employers of every size. The risks can become particularly acute when the undisclosed relationship involves dealings with government entities, as illustrated by the fallout from a private developer’s dealings with a municipality in United States v. Jordan, No. 22-40519 (5th Cir. Oct. 18, 2023). In that case, Mark Jordan, a real-estate developer and managing partner of entities developing the Palisades project in Richardson, Texas, entered into a sexual relationship with Richardson’s mayor, Laura Jordan, while she participated in votes and negotiations affecting his project. During the relationship, the developer provided the mayor cash, a $40,000 check, trips, luxury hotel stays and more than $24,000 in home renovations, and later hired her for a $150,000-a-year position despite her lack of relevant licensing or experience.   When a city ethics investigation examined her involvement with the developer, neither disclosed their sexual relationship or the financial benefits; the investigator consequently found no wrongdoing, after which the city agreed to reimburse the developer and his partners approximately $47 million for infrastructure work, with the mayor voting for the agreement.   A federal jury ultimately convicted both participants of bribery-related offenses under 18 U.S.C. § 666 and tax offenses, and the Fifth Circuit affirmed the bribery convictions.   The decision illustrates that an undisclosed intimate relationship becomes substantially more dangerous when accompanied by gifts, employment opportunities or other benefits and when the conflicted decision-maker participates in transactions benefiting the other participant or that participant’s business; the exposure can extend beyond employment discipline to criminal prosecution, invalidation or investigation of the affected transaction, restitution and significant reputational and governance consequences.

For employers, undisclosed sexual, romantic, familial, financial, or other close personal relationships involving employees, executives, board members, fiduciaries, or other decision-makers and individuals employed by or leading vendors, customers, regulators, professional advisors, competitors, governmental agencies, or other organizations doing business with the employer may create actual or perceived conflicts of interest that expose the organization to substantial risk. Even where conflicts don’t result in prosecutions, disqualification or other enforcement, actual or perceived conflicts of interest can fuel reputational damage and distrust harmful the employing business.

Disclosure Matters

In most cases, a personal relationship is not inherently improper. The legal and business risks generally arise when a relationship is undisclosed or compromises—or reasonably appears to compromise—the individual’s ability to exercise independent business judgment.

Failure to disclose relevant relationships may:

  • Undermine confidence in contracting, procurement, hiring, promotion, compensation, or other business decisions.
  • Create actual or perceived favoritism.
  • Raise questions regarding compliance with fiduciary, ethical, or professional obligations.
  • Trigger internal investigations, litigation, or regulatory scrutiny.
  • Jeopardize contractual or governmental relationships.
  • Damage employee trust and organizational reputation.

Even where no intentional misconduct ultimately is established, the resulting investigations, litigation costs, business disruption, and reputational harm may be significant.

Employers Should Review & Enforce Conflict-of-Interest Policies

Many employers maintain conflict-of-interest policies but focus primarily on financial interests. Organizations should consider whether existing policies adequately address personal relationships that could reasonably affect—or appear to affect—business decisions.

Particular attention should be given to relationships involving:

  • Vendors and suppliers;
  • Outside legal counsel, consultants, accountants, actuaries, and other professional advisors;
  • Customers and clients;
  • Government officials and regulators;
  • Board members and corporate officers;
  • Investors, lenders, or fiduciaries;
  • Joint venture or strategic partners;
  • Competitors; and
  • Supervisory or reporting relationships within the organization.

Practical Risk Management Steps

Employers should consider:

  • Carefully identifying all applicable conflict of interest and disclosure requirements arising under applicable statutes, regulations, policies and contracts;
  • Maintaining comprehensive conflict-of-interest disclosure requirements;
  • Requiring periodic conflict certifications by directors, officers, fiduciaries, managers, and designated employees;
  • Providing confidential reporting mechanisms;
  • Establishing procedures for reviewing disclosed conflicts and documenting mitigation measures;
  • Requiring recusals where appropriate;
  • Providing regular ethics and conflict-of-interest training; and
  • Periodically reviewing governance, procurement, and compliance practices.

Takeaway

Recent federal court proceedings demonstrate that undisclosed personal relationships can undermine confidence in decision-making and expose organizations to substantial legal and business consequences. Regardless of industry, employers should periodically review conflict-of-interest policies, disclosure procedures, governance practices, and training programs to ensure they address both actual and perceived conflicts before they become costly disputes or inflict other damage.

For Help or More Information

The author of this update, Cynthia Marcotte Stamer is an attorney Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization with decades of experience advising and assisting health industry and other employers to design, audit, and defend their employment and other risk management and compliance practices, including conducting audits and investigations, designing and updating compliance and risk management programs, responding to government investigations, conducting transaction, governance, and other due diligence, and assisting with other legal and operational compliance and risk management and legislative and regulatory affairs. She is available to assist your organization in assessing the impact of these developments and navigating the compliance and strategic steps that follow. For more information about these concerns or Ms. Stamer, contact Ms. Stamer via e-mail or via telephone at (214) 452 -8297.

About the Author

Cynthia Marcotte Stamer is an American College of Employee Benefits Counsel and a Martindale-Hubble “AV-Preeminent” (Top 1%) attorney and advisor board certified in labor and employment law by the Texas Board of Legal Specialization peer peer celebrated as “Top Rated Lawyer” and “LEGAL LEADER™ “Top Rated Lawyer” and “Best Lawyer” for her work in ERISA & Employee Benefits Law, Health Care Law, Labor and Employment Law, and Business and Commercial Law.

Nationally recognised for her decades of leading edge workforce, health and other employee benefits and insurance, compensation, regulatory affairs and compliance, and other human resources and other management work, public policy leadership and advocacy, coaching, teachings, and publications, Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private highly regulated and performance dependent organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.  As a a key focus of this work, she has continuously and extensively worked with domestic and international health plans, their sponsors, fiduciaries, administrators, and insurers; managed care and insurance organizations on workforce and performance management, employee benefits, compensation, regulatory and operational compliance, and other related concerns.

Her experience includes more than 35 years of leading edge work experience helping health care systems and organizations, group and individual health care providers, government contractors and other performance dependent employers; health plans and insurers, and a broad range of other businesses design and administer workforce, compensation and benefits, compliance and risk management and other practices and policies, and operate and defend organizations and practices to prevent, investigate, manage and resolve performance and behavior; manage civil rights, discrimination and accommodation, and other regulatory, contractual and other compliance responsibilities and risks; vendors and suppliers; conducting and defending investigations, audits, investigations, and other actions; crisis preparedness and response; to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Department of Insurance, Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, trucking, alcohol and firearm, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement;  and other strategic and operational concerns.

Former lead advisor to the Government of Bolivia on its Social Security Privatization reform, Ms. Stamer also has extensive international, federal and state legislative and regulatory affairs experience on federal, state and international workforce, employee benefits, healthcare, education, insurance, data privacy and security, antitrust, and other regulations and reforms.

In addition, Ms. Stamer also is widely celebrated for her leadership in the American Bar Association (“ABA”) and a multitude of other policy, professional, civic, educational, community and other organizations. Ms. Stamer currently or previously served as the the American Bar Association (“ABA”) Joint Committee on Employee Benefits (“JCEB”) leadership council, Scribe leading the Department of Health and Human Services annual agency meeting and a representative to other annual agency meetings, speaker, author and faculty; the ABA International Section International Employment Law Committee and International Life Sciences Committee Chair; the ABA Tort Trial and Insurance Practice Section Medicine and Law Committee Chair, SCOPE member, and Employee Benefits and Worker’s Compensation Committees Vice Chair; the ABA Health Law Section Managed Care & Insurance Interest Group Chair and Risk Management Interest Group Vice Chair; the ABA RPTE Employee Benefits & Other Compensation Group Chair and Welfare Benefit, Fiduciary Responsibility, and Plan Terminations and Transactions Committees Chair; the North Texas Health Care Compliance Professionals Association Vice President and Executive Director; a Southwest Benefits Association Board Member, Treasurer and Continuing Education Committee Chair; a SHRM Consultants National and Region IV Board Chair; a WEB National Board Member and Dallas Chapter President; the National Kidney Foundation of North Texas Board Member and Compliance Chair; the Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency Board President; a North Texas United Way Long Range Planning Committee Member; and in many other leadership roles in a broad range of other professional and civic organizations.

Along with these activities, Ms. Stamer also has earned national recognition for her authorship of thousands of highly regarded works, presentations as a knowledgeable speaker, testimony and other input of regulators and legislators, and media interviews on health and other benefits, human resources and other workforce, health care, insurance, data privacy and security and other related concerns. 

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

Comments Off on Hidden Personal Relationships Can Become Costly Business Risks: Lessons for Employers from Recent Federal Bankruptcy Proceedings | Bribery, conflict of interest, Corporate Compliance, corporate governance, Employer, Ethics | Permalink
Posted by Cynthia Marcotte Stamer

What EEOC Scrapping Of Long-Standing Affirmative Action Guidance Means for Employers

July 1, 2026

The U.S. Equal Employment Opportunity Commission (“EEOC”) on June 30, 2026 voted to rescind two long-standing agency policy documents that for nearly 40 years shaped how employers structured voluntary workplace affirmative action efforts under Title VII of the Civil Rights Act of 1964. The Commission withdrew its 1979 interpretive guidelines, Affirmative Action Appropriate Under Title VII of the Civil Rights Act of 1964, as Amended, codified at 29 C.F.R. Part 1608, along with the related Compliance Manual Section 607 on Affirmative Action. See EEOC, “EEOC Votes to Rescind Affirmative Action Interpretive Guidelines and Related Compliance Manual” (June 30, 2026).

What the EEOC Did

The Commission determined that the 1979 Affirmative Action Guidelines conflict with the text of Title VII and with Supreme Court case law developed over the four decades since they were issued. EEOC Chair Andrea Lucas stated that the rescission is consistent with the text of Title VII and with Supreme Court precedent, and that the Commission’s action reaffirms that Title VII’s protections apply equally to every American worker. EEOC Press Release.

The Commission also voted to rescind the related Compliance Manual Section 607, finding it obsolete in light of the guideline rescission and inconsistent with intervening Supreme Court and lower court authority. Id.

What the Old Guidelines Did

The now-withdrawn Part 1608 Guidelines described the circumstances under which the Commission would treat voluntary, race-, sex-, or national-origin-conscious affirmative action as permissible under Title VII — including where an employer’s self-analysis identified an actual or potential adverse impact, the continuing effects of prior discriminatory practices, or an artificially limited applicant or promotion pool. A compliant plan under the Guidelines required three elements: a reasonable self-analysis, a reasonable basis for concluding action was appropriate, and reasonable, narrowly tailored action tied to the problem identified. See 29 C.F.R. § 1608.3 and 29 C.F.R. § 1608.4.

Critically, the Guidelines also functioned as a safe harbor. Section 713(b)(1) of Title VII, codified at 42 U.S.C. § 2000e-12(b)(1), allows a respondent to defend against a Title VII claim by showing it acted in good faith, in conformity with, and in reliance upon a written interpretation or opinion of the Commission. The Part 1608 Guidelines were themselves the Commission’s designated written interpretation for this purpose. See 29 C.F.R. § 1608.1 and 29 C.F.R. § 1608.9. With the Guidelines rescinded, that good-faith reliance defense is no longer available on a going-forward basis for affirmative action plans adopted or maintained after the rescission.

Court & Executive Orders Behind Policy Change

The rescission follows Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025), which directed federal agencies to terminate discriminatory and illegal preferences, mandates, policies, guidance, and enforcement positions, and to enforce longstanding civil rights laws against illegal private-sector DEI preferences and mandates. Id.

The rescission does not amend the text of Title VII itself. Title VII continues to prohibit discrimination in hiring, discharge, compensation, and other terms and conditions of employment because of race, color, religion, sex, or national origin. See Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq..

Employer Takeaways

Employers should treat this rescission as a signal of heightened EEOC scrutiny of race-, sex-, and national-origin-conscious employment practices, not as a wholesale prohibition on diversity or equal opportunity efforts. Stakeholder-specific action items follow.

C-Suite, Boards & Talent Leadership

C-suite, board and talent leaders should:

• Expect continued federal scrutiny of DEI-labeled programs and align messaging, policy documents, and public disclosures with a merit-based, individualized-decision-making framework.

• Budget for a documented, privileged legal review cycle for affirmative action, DEI, and representation-focused programs rather than a one-time policy edit.

• Monitor for parallel developments, including EEOC action affecting EEO-1 reporting and recordkeeping obligations, which may further change the compliance landscape.

In-House Counsel

In-house counsel should:

• Reassess litigation and charge-response strategy for any pending or anticipated EEOC matter that previously anticipated reliance on the Part 1608 Guidelines or the Section 713(b)(1) defense.

• Confirm that any voluntary affirmative action plan retained going forward is independently defensible under Title VII’s text and controlling case law, rather than under agency guidance that no longer exists.

• Coordinate review of affected plans under attorney-client privilege and work product protections given the increased risk of EEOC inquiry, private litigation, and reverse-discrimination claims.

Human Resources & Compliance Teams

Human resources and compliance teams should:

• Inventory all existing affirmative action plans, DEI hiring/promotion goals, mentoring, internship, fellowship, or pipeline programs that reference race, sex, or national origin as a factor in opportunity or selection.

• Flag any program that was adopted or documented as relying on the now-rescinded Part 1608 Guidelines or the Section 713(b)(1) good-faith defense for immediate legal review.

• Distinguish programs that merely expand outreach or applicant pools without using a protected characteristic as a selection factor from those that reserve slots, apply preferences, or set numeric targets tied to protected traits.

Cautionary Reminder: Protect Privilege

Employers reviewing existing affirmative action, DEI, or representation-focused programs in response to this rescission are strongly encouraged to conduct that review under attorney-client privilege and attorney work product protections, and to route related communications and self-analyses through counsel accordingly.

For Help or More Information

The author of this update, Cynthia Marcotte Stamer is an attorney Board Certified in Labor and Employment Law by the Texas Board of Legal Specialization with decades of experience advising and assisting health industry and other employers to design, audit, and defend their employment and other risk management and compliance practices, including conducting audits and investigations, designing and updating compliance and risk management programs, responding to government investigations, conducting transaction, governance, and other due diligence, and assisting with other legal and operational compliance and risk management and legislative and regulatory affairs. She is available to assist your organization in assessing the impact of these developments and navigating the compliance and strategic steps that follow. For more information about these concerns or Ms. Stamer, contact Ms. Stamer via e-mail or via telephone at (214) 452 -8297.

About the Author

Cynthia Marcotte Stamer is an American College of Employee Benefits Counsel and a Martindale-Hubble “AV-Preeminent” (Top 1%) attorney and advisor board certified in labor and employment law by the Texas Board of Legal Specialization peer peer celebrated as “Top Rated Lawyer” and “LEGAL LEADER™ “Top Rated Lawyer” and “Best Lawyer” for her work in ERISA & Employee Benefits Law, Health Care Law, Labor and Employment Law, and Business and Commercial Law.

Nationally recognised for her decades of leading edge workforce, health and other employee benefits and insurance, compensation, regulatory affairs and compliance, and other human resources and other management work, public policy leadership and advocacy, coaching, teachings, and publications, Ms. Stamer’s work throughout her career has focused heavily on working with health care and managed care, health and other employee benefit plan, insurance and financial services and other public and private highly regulated and performance dependent organizations and their technology, data, and other service providers and advisors domestically and internationally with legal and operational compliance and risk management, performance and workforce management, regulatory and public policy and other legal and operational concerns.  As a a key focus of this work, she has continuously and extensively worked with domestic and international health plans, their sponsors, fiduciaries, administrators, and insurers; managed care and insurance organizations on workforce and performance management, employee benefits, compensation, regulatory and operational compliance, and other related concerns.

Her experience includes more than 35 years of leading edge work experience helping health care systems and organizations, group and individual health care providers, government contractors and other performance dependent employers; health plans and insurers, and a broad range of other businesses design and administer workforce, compensation and benefits, compliance and risk management and other practices and policies, and operate and defend organizations and practices to prevent, investigate, manage and resolve performance and behavior; manage civil rights, discrimination and accommodation, and other regulatory, contractual and other compliance responsibilities and risks; vendors and suppliers; conducting and defending investigations, audits, investigations, and other actions; crisis preparedness and response; to establish, administer and defend workforce and staffing, quality, and other compliance, risk management and operational practices, policies and actions; comply with requirements; investigate and respond to Department of Insurance, Board of Medicine, Health, Nursing, Pharmacy, Chiropractic, trucking, alcohol and firearm, and other licensing agencies, Department of Aging & Disability, FDA, Drug Enforcement Agency, OCR Privacy and Civil Rights, Department of Labor, IRS, HHS, DOD, FTC, SEC, CDC and other public health, Department of Justice and state attorneys’ general and other federal and state agencies; JCHO and other accreditation and quality organizations; private litigation and other federal and state health care industry actions: regulatory and public policy advocacy; training and discipline; enforcement;  and other strategic and operational concerns.

Former lead advisor to the Government of Bolivia on its Social Security Privatization reform, Ms. Stamer also has extensive international, federal and state legislative and regulatory affairs experience on federal, state and international workforce, employee benefits, healthcare, education, insurance, data privacy and security, antitrust, and other regulations and reforms.

In addition, Ms. Stamer also is widely celebrated for her leadership in the American Bar Association (“ABA”) and a multitude of other policy, professional, civic, educational, community and other organizations. Ms. Stamer currently or previously served as the the American Bar Association (“ABA”) Joint Committee on Employee Benefits (“JCEB”) leadership council, Scribe leading the Department of Health and Human Services annual agency meeting and a representative to other annual agency meetings, speaker, author and faculty; the ABA International Section International Employment Law Committee and International Life Sciences Committee Chair; the ABA Tort Trial and Insurance Practice Section Medicine and Law Committee Chair, SCOPE member, and Employee Benefits and Worker’s Compensation Committees Vice Chair; the ABA Health Law Section Managed Care & Insurance Interest Group Chair and Risk Management Interest Group Vice Chair; the ABA RPTE Employee Benefits & Other Compensation Group Chair and Welfare Benefit, Fiduciary Responsibility, and Plan Terminations and Transactions Committees Chair; the North Texas Health Care Compliance Professionals Association Vice President and Executive Director; a Southwest Benefits Association Board Member, Treasurer and Continuing Education Committee Chair; a SHRM Consultants National and Region IV Board Chair; a WEB National Board Member and Dallas Chapter President; the National Kidney Foundation of North Texas Board Member and Compliance Chair; the Richardson Development Center (now Warren Center) for Children Early Childhood Intervention Agency Board President; a North Texas United Way Long Range Planning Committee Member; and in many other leadership roles in a broad range of other professional and civic organizations.

Along with these activities, Ms. Stamer also has earned national recognition for her authorship of thousands of highly regarded works, presentations as a knowledgeable speaker, testimony and other input of regulators and legislators, and media interviews on health and other benefits, human resources and other workforce, health care, insurance, data privacy and security and other related concerns. 

For more information about Ms. Stamer or her health industry and other experience and involvements, see www.cynthiastamer.com or contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

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Posted by Cynthia Marcotte Stamer