Employee Complaints Don’t Always Give Rise to Legal Protection, but Employers Must Tread Carefully

Most companies want their employees to bring legitimate concerns to their attention. Sometimes those concerns are about the employee’s belief that he or she is being treated less fairly based on their race, age, disability, or any other protected characteristic. These complaints are easy to spot and triage as protected activity. But increasingly common in today’s workplace are complaints broadly directed to the job itself: micromanaging or unfriendly supervisors, unwanted reassignments, and not being heard.

Employers must understand the difference. The Eighth Circuit Court of Appeals helped clarify this distinction in ., confirming that the federal anti-retaliation law (Title VII of the Civil Rights Act of 1964) protects employees who oppose unlawful discrimination or harassment, not employees who simply report being unhappy at work. 

Turning Up the Volume: The Plaintiff-Employee Complained Early and Often

Becky Joseph worked for Thomas-Grace Construction (TGC) as a Lead Installer for roughly four months, generating a substantial email trail in the process. The complaints commenced almost simultaneously with her employment:

• Day two. She complained that her supervisor “let [her] know he knows the best way” and was “prevent[ing] [her] from doing [her] part.”
• Day three. She emailed to resign, saying she had been “misled” and “disrespected” — then withdrew the resignation after TGC explained her shift rotation was part of training.
• On a new supervisor’s first day. She complained that he “want[ed] everything his way,” that “I’m ahead at knowing what we have and what we need,” and that “I feel they are demeaning, don’t want my opinion, and don’t respect my own way.” She emailed him directly: “I’m not going to be criticized or demeaned, because of your self proclaimed prick title.”

None of these mentioned sex, gender, or discrimination. In one email, Joseph did reference a supervisor’s “old fashioned ideals when it comes to females and the work” — but days later she apologized, writing that she was “beginning to see [the supervisor] as a kind man,” that she felt “embarrassed and ashamed” at her reaction, and that she “was wrong.”

It was not until Joseph was responding to TGC’s request for evidence in its investigation that she wrote that “[t]he men are always right in the eyes of the company . . . [and] are treated as more valuable.” Even then, in her own investigative interview a week later, she did not mention sex discrimination by anyone at TGC.

Courts Turn the Volume Back Down

The district court granted summary judgment on Joseph’s retaliation claims squarely on the protected-activity element: “none of [Joseph’s] complaints, even broadly construed, included allegations . . . [of] sex discrimination,” and “[a]s such, her complaints . . . do not amount to protected activity.”

The Eighth Circuit affirmed without reaching the protected activity question, holding that “even if we assume [Joseph] has established a prima facie case of retaliation, [s]he has failed to establish pretext.” But the same distinction drove the Eighth Circuit’s pretext analysis. Joseph’s best evidence was an email from TGC’s Director of Operations, stating “[w]e need to terminate [Joseph]” and calling her complaint “BS.” The court dispatched it in a sentence that is the heart of the opinion: “[T]he record does not show that the email in question was responding to protected activity at all, given that it was reacting to Joseph’s email to [her supervisor], in which she did not mention sex or discrimination but merely complained about his leadership style.”

The court then reiterated the principle that courts should “filter out complaints attacking ‘the ordinary tribulations of the workplace.” Timing sealed it: the company’s “terminate her” email came one day before Joseph’s first discrimination-flavored complaint — and there was no evidence of any negative reaction to that later complaint.

TGC’s legitimate reasons for terminating Joseph’s employment were also straightforward: repeated conflicts with successive supervisors (sometimes on their first day), a forklift accident within her first week at a jobsite, and an incident in which she screamed at hotel staff. As the court noted, “Title VII . . . does not prohibit employment decisions based on . . . job performance . . . [or] personality conflicts.” Rather than accept a transfer to the only open jobsite — at the same pay and benefits — Joseph resigned.

The Takeaways:

• Content, not volume, determines protection. The volume – whether in the content or the number of complaints – can often overtake the substance. A complaint becomes protected activity when it conveys opposition to conduct that Title VII makes unlawful. Complaints about methods, autonomy, respect, and being overruled read as workplace friction, not opposition to discrimination – no matter how many such grievances are filed.

• Sequence can break the causal chain. If the decisionmaker’s adverse reaction predates the first arguably protected complaint, causation can fail. In Joseph, that one-day gap is a key reason why the plaintiff’s strongest exhibit did not get her to a jury.

• The employee’s own record cuts both ways. Joseph’s apology (“I was wrong”) undercut her later claim that the same supervisor discriminated against her from the start. Both the district court and Eighth Circuit also cited her silence on discrimination during her own investigative interview.

The Next Steps:

• Don’t let managers triage protected activity. Escalate anything touching a protected characteristic to HR — but document what the employee actually said, because that record may later define the legal question.

• Keep documenting performance and conduct. TGC contemporaneously documented the hotel incident and the forklift accident, even though it did not impose discipline at the time. That documentation became the core of its defense.

• In an investigation, ask for the employee’s evidence in writing. TGC requested witnesses, documents, and comparators; the thin response was powerful at summary judgment. Joseph later called the investigation a “sham” but “d[id] not identify any issues with the investigation nor how alleged bias affected it.”

• Mind your internal emails. A managerial employee’s email comments stating “We need to terminate her” and calling her complaint “BS” nearly bought TGC a trial. What saved the employer was the prompt reversal, the real investigation, and a no-loss alternative assignment — not the email’s innocence.  Coaching managers on how to communicate about these matters (and the likelihood that they will be examined down the line) is as important on teaching them how to document misconduct.

Bottom Line

Joseph is not permission to ignore complaints. It confirms that retaliation liability attaches to opposition to unlawful conduct, and that an employee who spends months complaining about supervision style before belatedly invoking discrimination needs more than her own say-so to reach a jury.

What Employers Need to Know as Legal Requirements Try to Catch Up with Algorithmic Hiring Tools

Artificial intelligence is becoming more mainstream in employers’ hiring workflows. Tools that screen resumes, analyze video interviews, predict candidate success, and optimize scheduling are often standard offerings from HR technology vendors. But rapid adoption of these tools can overlook the legal frameworks governing them. Employers should approach AI-powered hiring tools not as just technology purchases but as regulated employment practices that carry litigation risks, including the following.

Disparate Impact and Algorithmic Bias. AI hiring tools are susceptible to disparate impact claims under federal and state anti-discrimination laws. Even small algorithmic biases arising from biased training data, flawed model design, or so-called “proxy” variables like zip code, educational institution, or commute distance can produce selection ratios that may systematically disadvantage protected groups without any discriminatory intent on the part of the employer or tool developer. Historical data used to train the AI tool may replicate or amplify prior discriminatory hiring patterns, making bias a systemic rather than incidental risk. As we have previously written, cases like Mobley v. Workday and the EEOC’s settlement with iTutorGroup demonstrate that AI-related employment discrimination claims are actively being litigated and enforced.

Disability Accommodation. Under the ADA, employers remain responsible for ensuring that third-party AI tools do not unlawfully screen out individuals with disabilities. When an AI assessment method disadvantages applicants with disabilities, employers may need to provide alternative assessment methods. Reliance on a vendor’s assurance that the tool is “ADA-compliant” does not relieve the employer of its independent legal obligations.

Black-Box and Vendor Issues. Many AI hiring tools operate as proprietary “black boxes” with limited transparency into their decision-making logic. Yet employers, not vendors, bear responsibility when these tools produce discriminatory outcomes. Vendor assurances alone are insufficient; employers need access to validation studies, adverse impact analyses, and audit documentation. Ultimately, if a hiring decision is challenged, employers should be able to explain why they made it.

Patchwork Federal, State, and Local Requirements. Federal, state, and local jurisdictions are each moving independently to regulate AI hiring, as we have previously written about. Given the patchwork of requirements and uncertainty regarding uniform federal guidelines, employers must both monitor their own usage of AI in hiring and stay apprised of updates to federal, state, and local laws and regulations.

Practical Compliance Checklist for Employers. Employers using or contemplating AI hiring tools should consider the following steps:

• Inventory all AI tools used in recruitment, screening, interviewing, and selection, including those embedded in broader HR platforms.
• Demand vendor documentation, including validation studies, model methodology, training data descriptions, and adverse impact testing results.
• Conduct or commission independent bias audits and adverse impact analyses, and do not rely solely on vendor-supplied assessments.
• Implement meaningful human oversight at key decision points to ensure that algorithmic outputs are reviewed before consequential employment actions.
• Establish accommodation alternatives so applicants who cannot engage with AI-driven tools due to disability have access to equivalent evaluation methods.
• Provide required notices and obtain consents where applicable under applicable laws and regulations.
• Retain records of model versions, audit results, validation studies, and decision logs sufficient to demonstrate compliance and defend against claims.
• Monitor multijurisdictional requirements, as new AI-specific employment laws continue to emerge at the federal, state, and local levels.

While the efficiency and convenience gains of AI hiring tools may be genuine, so are the legal exposure risks. The safest use of AI in hiring combines explainability, oversight, and documentation. Employers will be positioned to capture the efficiency benefits of AI while managing litigation risk by understanding how their tools work, building governance structures around them, and treating compliance as a design requirement for them. Those that treat AI hiring as a procurement decision rather than a regulated initiative may find themselves on the wrong end of an enforcement action or class claim.

The past few weeks have brought significant developments in U.S. immigration law that directly impact employers and human resource (HR) professionals. From the termination of Temporary Protected Status (TPS) for nationals of multiple countries to new enforcement priorities and policy shifts, HR teams must stay informed to ensure compliance and support affected employees. This article summarizes the key changes and offers practical guidance for employers navigating this evolving landscape.

TPS Terminations: What Employers Need to Know

The Department of Homeland Security (DHS) has announced the termination of Temporary Protected Status for nationals of several countries. TPS is a humanitarian designation that allows nationals of designated countries to live and work lawfully in the United States when conditions in their home countries — such as armed conflict, environmental disasters, or other extraordinary circumstances — temporarily prevent safe return.

Recent announcements have terminated or announced termination dates for TPS for nationals of Venezuela, Haiti, El Salvador, Honduras, Nicaragua, Nepal, and Sudan, among others. The largest number to lose TPS status are Haitian nationals working under Employment Authorization Documents (EADs) in categories A12 and C19. Employees with those categories of work authorization lost their status effective July 27, 2026. Unless they obtained some other basis for work authorization, . Some news estimate that as many as 300,000 workers lost work authorization on July 27. The complete list of terminated TPS and their effective dates can be found on the .

Heightened Enforcement and Compliance Priorities

As also reported in various[KW1] [LH2]  news outlets this past week, the Trump administration is focusing enforcement inside U.S. airports and arresting foreign citizens with expired U.S. visas as they travel domestically.

On July 16, 2026, the Department of Homeland Security changes to the J-1 (work- and study-based cultural exchange programs) and F-1 (student) visa programs. Historically, students in these categories were admitted for the “duration of status,” meaning they could remain in the U.S. as long as they maintained their educational program and related authorized activities. Under the new rule, students will instead be admitted for a fixed period tied to their program, capped at four years per admission period.

This could negatively impact the availability of for companies. Employers who rely on these talent pipelines should monitor regulatory developments closely and consider diversifying their recruitment strategies.

The Trump administration has signaled increased worksite enforcement activity. Immigration and Customs Enforcement (ICE) has expanded I-9 audits and worksite investigations, and employers should anticipate more frequent and rigorous scrutiny of their employment eligibility verification practices.

HR professionals should take this opportunity to conduct internal I-9 audits to identify and correct any errors before government inspection. Common deficiencies include incomplete or missing forms, late completion, and improper document retention. Additionally, employers should ensure that their I-9 policies are applied consistently to all employees, regardless of national origin or perceived immigration status to avoid discrimination claims. Employers may be fined from $288 to $2,861 per form for purely technical errors in the form, even if the employee has valid work authorization.

Changes to Legal Immigration Programs

The administration has also introduced policy changes affecting legal immigration pathways. U.S. Citizenship and Immigration Services (USCIS) has issued updated guidance affecting the adjudication of certain visa petitions and applications, with a general trend toward increased scrutiny of applications and a higher volume of Requests for Evidence. Employers sponsoring workers for H-1B visas should prepare more robust documentation supporting the specialty occupation nature of positions and the qualifications of beneficiaries.

What Employers Must Do to Stay Compliant

• Review Form I-9 for existing employees to know which employee’s status has been or will be revoked in the near term.
• If an employee’s status has been terminated, ask them if they have obtained alternative status. If not, the employee must be terminated. If they claim to have obtained alternative status, they must prove it by presenting valid documentation.
• Employers should be on the lookout for increased use of fraudulent identity and work authorization documents. The for the Social Security Administration and each state’s driver’s license bureau have samples of what authentic documents should look like.
• Employers should check of the I-9 Handbook for Employers to understand the variety of documents that can prove work authorization.
• Remind employees who travel for business to always carry up-to-date identification necessary to clear TSA security and, if travelling internationally, a valid passport and necessary visas. Both the United Kingdom and the European Union have announced plans to implement mandatory admission documents even for U.S. citizens who previously did not need a visa to travel to those countries.

Looking Ahead

The immigration landscape is shifting rapidly, and HR professionals must remain vigilant. Many of these policy changes are subject to ongoing litigation, and court decisions could alter implementation timelines or block certain actions entirely. Employers should establish relationships with experienced immigration counsel who can provide timely updates and guidance tailored to their specific workforce needs.

Proactive compliance efforts, regular training for HR staff on I-9 procedures and anti-discrimination requirements, and clear internal policies on responding to government inquiries will help employers navigate this challenging environment. By staying informed and prepared, HR professionals can protect both their organizations and their employees during this period of significant change.

For questions or assistance with immigration compliance matters, please contact the authors or your Âé¶čֱȄ & Lardner LLP relationship partner.

On June 11, the U.S. District Court for the Northern District of California issued the first-ever ruling to squarely address whether restricted stock units must be included in the regular rate of pay when calculating overtime under the Fair Labor Standards Act.

In Costa v. Apple Inc., the court granted summary judgment to Apple, holding that both the FLSA gift exception and its equity exception permitted Apple to exclude the value of vested restricted stock units from the regular rate of pay for a certified class of nonexempt employees across California and New York.

Although this decision hands employers a win on a previously unresolved wage and hour question, it is a reminder that favorable outcomes on novel issues often hinge on the specific facts of a company’s own program, as well as the kind of ongoing, documented compliance efforts that helped shield Apple from liquidated damages and a longer look-back period, as discussed below.

The Case: Costa v. Apple

In October 2015, Apple expanded its restricted stock unit, or RSU, program to cover all employees, including those classified as nonexempt and eligible for overtime. Apple described the awards to employees as a promise to give them shares of Apple stock over a vesting schedule, awarded at no cost and vesting over time during active employment.

Each year, Apple determined which employees would receive RSU awards and in what amount based on job level and function — decisions that the record showed were untethered to hours worked, production or past performance. Apple excluded the value of vested RSUs from the regular rate of pay it used to calculate overtime for its nonexempt employees.

Plaintiff Francis Costa sued on behalf of himself and other nonexempt Apple employees who received RSUs, arguing that Apple’s exclusion of the vested RSU value from the regular rate violated the FLSA and analogous California and New York wage laws. Following class certification, both sides moved for summary judgment on the central question of whether RSU value must be folded into the regular rate.

The Court’s Rulings

The court held that Apple’s RSUs satisfy the FLSA equity exception, even though that provision, by its terms, applies to grants under a “stock option, stock appreciation right, or bona fide employee stock purchase program” and does not mention RSUs specifically — noting that RSUs were not yet a common form of equity pay when Congress created the exception more than 25 years ago.

Relying on the statute’s legislative history and the close functional similarities between RSUs and stock options, the court concluded that RSUs fall within the exception’s intended scope.

The court also held, in the alternative, that Apple’s RSUs qualify for the FLSA’s gift exception. Because Apple retained complete discretion over whether to grant RSUs at all, and because award size was not tied to hours worked, production or efficiency, the court found the awards more closely resembled discretionary longevity payments that other courts have excluded as gifts than compensation promised in advance for labor.

Beyond the regular-rate question, which the court recognized was a novel question and could be subject to appellate scrutiny, the court addressed the secondary issues of Apple’s good faith and willfulness defenses. It found that Apple’s payroll team had made ongoing efforts to monitor developments affecting regular-rate calculations, including through internal reviews and industry engagement, and that no controlling authority existed that could have put Apple on notice that its RSU treatment might be unlawful.

Because Apple’s conduct was neither willful nor lacking in good faith, the court recognized that, under the FLSA, a two-year, rather than three-year, statute of limitations should apply if the case continued and that liquidated damages were inappropriate.

Implications for Employers With Equity Programs

Costa provides welcome clarity for employers that have expanded equity programs to hourly and other nonexempt workers.

Apple paid its employees full wages and overtime; the only question was whether RSU values should have been included for the overtime rate, and the court’s answer was a clear no. But the ruling is fact-intensive, and employers should not assume their own equity programs will receive the same treatment.

The court’s analyses turned on specific features of Apple’s program: (1) Apple retained complete discretion over whether to grant RSUs and to whom, (2) award amounts were untethered to hours worked or production, (3) employees had no contractual right to future grants, and (4) the ultimate value of the awards was unknowable until vesting.

Employers offering equity to nonexempt employees should audit their own plan documents and administration to confirm these same characteristics are present — and documented — before assuming RSUs or similar equity awards can be excluded from the regular rate for purposes of calculating owed overtime compensation.

Employers should also remember that nonexempt employees must still receive 1.5 times the regular rate of pay for each hour worked over 40 in a workweek, and that the regular rate generally includes all nondiscretionary bonuses, commissions, shift differentials and incentive pay, even though qualifying equity awards need not be included.

Caution: Not a License to Use Equity as a Substitute for Wages

Startup companies, in particular, routinely run into trouble by skipping wages entirely and substituting equity for the paychecks the law demands. The FLSA applies to virtually all private employers, and courts interpret its coverage broadly.

The only narrow exception with respect to the provision of equity in lieu of pay is the business owners’ exemption for employees who own at least 20% of the business and are actively engaged in its management — meaning they direct employees, plan work or control budgets, not simply work long hours without exercising managerial authority.

For everyone else, including engineers or marketing hires promised equity in lieu of a salary, there is no general startup exemption, and the employer must pay at least minimum wage and overtime unless the worker independently qualifies for another exemption — in which case, the salary requirement must be met. The decision in Costa did not change these long-standing principles.

Of Note: Apple’s Documented Compliance Efforts Mattered

The court’s discussion on Apple’s good faith and willfulness defenses also offers a practical lesson: Documented, ongoing compliance efforts matter, even when performed by nonlawyers.

Costa v. Apple arrives against a backdrop of substantial and growing wage and hour exposure. The U.S. Department of Labor continues to secure multimillion-dollar recoveries across healthcare, restaurants, logistics and construction — including more than $146 million for overtime violations and more than $27 million for minimum wage violations in fiscal year 2025 alone, with 2026 on a similar (if not greater) pace.[1]

Private litigation frequently produces even larger recoveries. These recoveries are often very large because FLSA penalties are steep — employees can recover unpaid wages and an equal amount in liquidated damages, plus attorney fees, and state law penalties can add further exposure. Employers that learn from others’ costly mistakes, as well as from others’ valuable good practices, will be far better positioned to avoid becoming the next multimillion-dollar cautionary tale.

Key Takeaways and Compliance Tips

Even if Apple had lost the regular-rate issue, it would have avoided liquidated damages and a longer statute of limitations or look-back period for calculating actual damages, in part, because its payroll team conducted regular reviews of new payment types and stayed abreast of developments affecting regular-rate calculations. Employers should build similar habits into their own wage and hour compliance programs and HR departments.

Capture all time worked.

Require every nonexempt employee to record all time, including preshift, postshift, remote and mobile work. Create an easy process to report missed time punches, interrupted meals and after-hours work. Audit for unpaid tasks like computer startup, security screenings and donning/doffing uniforms.[2]

Audit overtime calculations.

Confirm which employees are nonexempt, and review payroll configurations to ensure overtime includes all required remuneration in the regular rate — nondiscretionary bonuses, commissions, shift differentials and premiums, and incentive pay. Run periodic payroll audits for blended rates, missed premiums and state daily overtime rules.[3]

Make break policies real, not just written.

Because many states, like California, mandate compensable meal breaks, tailor written break policies to each state, schedule breaks timely, and ensure employees are fully relieved of duty during unpaid meals (that is, they are not called off-break to address a concern — unless that break is compensated).

Use attestation prompts on time punch recording devices or systems for missed or interrupted meal periods, requiring employees to verify at the end of a shift or pay period whether they received their mandated breaks and to report any exceptions.

Treat classification as an ongoing process.

Do not classify employees as exempt based on title alone. Conduct privilege-protected audits focusing on actual duties, discretion, supervisory authority, salary basis and salary threshold. Reassess when job duties change. Be especially cautious with assistant managers, account managers and team leads.[4]

Train your managers.

Many violations originate with frontline supervisors who may ask employees to work off-the-clock or skip breaks due to staffing or emergent work needs. Managers must understand that they can control scheduling and that they cannot avoid paying for work performed.

Build an internal correction process.

Create a retaliation-free channel for wage concerns to be reported, investigate quickly, fix systemic issues prospectively and make retroactive corrections where needed. This process can provide a strong defense to later claims.

Taking these sorts of proactive steps can catch and eliminate a wage and hour violation before it becomes a million-dollar mistake, and it can also help demonstrate the kind of good faith that proved valuable for Apple.

• For more on this topic, see Watch Out Illinois Employers: The Illinois Wage Law Does Not Exclude Preliminary or Postliminary Activities from Compensable Work.
• For more on this topic, see The Importance of Internal Wage and Hour Audits and DOL Reminds Employers to Include Non-Discretionary Bonuses When Calculating Regular Rates and Overtime Premiums — But How?
• For more on this topic, see Reclassifying Employees to Independent Contractors Just Became Easier — Or Did It?.

This article was originally published in  on July 10, 2026, and is republished here with permission.

On May 29, 2026, the Texas Business Court held in Brown v. Exxon Mobil Corporation, 2026 Tex. Bus. 35 (11^th Div.), Cause No. 25-BC11B-0099, that an employment race discrimination claim brought under Section 21.051 of the Texas Commission on Human Rights Act (TCHRA) does not fall within the Business Court’s jurisdiction. The decision draws a jurisdictional line: employment disputes, even those involving corporate officers and equity compensation, generally do not qualify as “internal affairs” within the meaning of Chapter 25A of the Texas Government Code.

Background

Artis M. Brown, a 29-year employee of Exxon Mobil Corporation (Exxon) and a Vice President of a division within Exxon, was terminated in July 2025 after a random drug test. Exxon contends that Brown tested positive for THC and later resigned after meeting with human resources. Brown alleges that Exxon unlawfully terminated him because of his race and that non-Black executives who committed comparable policy violations received different treatment. After his termination, Exxon canceled approximately $5 million in unvested restricted stock units (RSUs) awarded to Brown through annual incentive agreements. After receiving a right to file his lawsuit from the Texas Workforce Commission, Brown filed suit in the District Court of Harris County, asserting a claim for race discrimination under Section 21.051 of the TCHRA. Exxon removed the case to the Business Court, and Brown moved to remand.

Jurisdictional Arguments

Exxon asserted two bases for Business Court jurisdiction. First, under Section 25A.004(b)(2), it argued that Brown’s lawsuit was “an action regarding the governance, governing documents, or internal affairs of an organization.” Specifically, Exxon advanced three sub-arguments: (1) Exxon’s CEO participated in the termination decision, making this a matter involving the “rights, powers, and duties” of an officer or governing person; (2) Brown was an officer and governing person by virtue of his Vice President title; and (3) the forfeited RSUs constituted “ownership interests” bringing the dispute within the definition of “internal affairs” under the statute.

Second, under Section 25A.004(d)(1), Exxon argued that Brown’s claims arose out of a “qualified transaction” — defined as a “transaction, or series of related transactions” under which a party “pays or receives, or is obligated to pay or is entitled to receive, consideration with an aggregate value of at least $5 million.” Tex. Gov’t Code § 25A.001(14)(A). Exxon identified the Incentive Program and the series of annual awards to Brown as the qualifying transaction.

The Court rejected both arguments and remanded the case. Addressing the “internal affairs” question, Judge Sweeten applied the canon of construction noscitur a sociis (“it is known by its associates”) to interpret the term in context with its statutory companions in Section 25A.004(b)(2): “governance” and “governing documents.” The Court noted that “governance” relates to “the management and direction of the entity’s affairs under its governing documents and applicable law,” and that “governing documents” are those “adopted under an organization’s governing law to govern the organization’s formation and internal affairs.” Reading these terms together, the Court concluded that “internal affairs” in Section 25A.004(b)(2) is best understood as encompassing internal entity governance as dictated by the entity’s governing documents and governing law.

The Court applied the same canon to Section 25A.001(7)(A), which defines “internal affairs” as “the rights, powers, and duties of an organization’s governing persons, officers, owners, and members.” Because “rights” is tied to “powers and duties” and framed by the phrase “of an organization’s governing persons, officers, owners, and members,” the Court construed “rights” narrowly as those arising from a person’s official role under the organization’s governing documents and governing law and not all rights personal to someone who happens to hold an officer title.

This framework confines “internal affairs” jurisdiction to disputes rooted in entity governance rather than as a catch-all for any dispute that involves a corporate officer. With this framework in place, the Court dispatched Exxon’s three sub-arguments. First, the Court held that the CEO’s (unspecified) participation in Brown’s termination did not create Business Court jurisdiction; not every action taken by a CEO involves the corporation’s “internal affairs.” Second, Brown’s status as a Vice President did not convert his discrimination claim into one “regarding” the internal affairs of the organization. Brown asserted his statutory rights that are common to millions of employees and do not arise from his status as an officer.

Third, the Court found that while the forfeited RSUs tangentially related to “ownership interests,” the actual “subject of disagreement” was Exxon’s allegedly discriminatory decision to forfeit the RSUs, not the existence or value of the RSUs themselves. As the Court emphasized, “[i]t is of no consequence to Brown’s claim whether the asset in question consisted of RSUs, future cash awards, or free gas for life.” The Court declined to read Chapter 25A in a “hyperliteral manner that would yield outcomes inconsistent with [its] statutory purpose.”

The Court also rejected the “qualified transaction” theory under Section 25A.004(d)(1), concluding that the Incentive Program was not a but-for cause of Brown’s claim. Brown’s claim is a standalone statutory cause of action for race discrimination. The RSUs are merely one component of his damages, and the action arises from the alleged discrimination and not the terms of the Incentive Program.

Why This Matters

Brown v. Exxon Mobil is a significant decision for the still-developing jurisdictional boundaries of the Texas Business Court. Had the Court adopted Exxon’s interpretation, arguably “almost any CEO decision made or action taken would involve the ‘rights, powers, and duties of an organization’s governing persons [or] officers,’ conferring Business Court jurisdiction.” Likewise, any employment matter related to an officer or “governing person” role would be sufficient for Business Court jurisdiction. Because publicly traded companies face no minimum amount-in-controversy threshold under Section 25A.004(c), such a reading could have funneled a wide range of discrimination, retaliation, and wrongful termination claims into a court system designed for “efficiently addressing complex business litigation.”

Employers and their counsel should take note that the mere involvement of a corporate officer in an employment decision, or the presence of equity compensation in a damages calculation, will not, standing alone, support removal of an employment dispute to the Business Court.

Tennessee House Bill 1034 was signed into law on May 7, 2026, and took effect July 1, 2026.  The law introduces two significant changes to employment-based noncompete agreements. First, the law bars noncompetes for employees earning below $70,000 annually. Second, it establishes statutory presumptions of reasonableness for noncompete duration.

Noncompete Agreements Prohibited for Employees Earning Below $70k Annually

Under Tenn. Code Ann. § 50-1-211, noncompete agreements are prohibited for employees who earn less than $70,000 in “annualized compensation.” The statute defines the term “annualized compensation” broadly to include wages, salary, commissions, nondiscretionary bonuses, and other forms of remuneration. For hourly employees, annualized compensation is calculated by multiplying the hourly rate by 40, then by 52.

In enacting Tenn. Code Ann. § 50-1-211, Tennessee joins a growing number of states — including Virginia, Illinois, Maine, and Washington — that prohibit noncompete agreements for workers below a specified income threshold.

Rebuttable Presumptions of Reasonableness

Tenn. Code Ann. § 50-1-210 also creates a statutory rebuttable presumption ​regarding
duration.  A restriction that falls at or below the applicable presumption is presumed reasonable; a restriction that exceeds it is presumed unreasonable. The presumptive periods vary by relationship type:

Tenn. Code Ann. § 50-1-210 explicitly grants courts the discretion to modify non-compete agreements to render them reasonable and enforceable, meaning that an agreement exceeding the presumption will not automatically fail as void and unenforceable.

Key Takeaways for Employers

Employers with Tennessee-based employees should review their restrictive covenant templates for compliance with the new income threshold and rebuttable statutory presumptions. Because House Bill 1034 is not retroactive, only agreements entered on or after July 1, 2026, are subject to the new requirements.

This article was prepared with the assistance of 2026 summer associate Ally Anderson.

Under the National Labor Relations Act (the Act), specifically Section 8(a)(1), it is considered an unfair labor practice (ULP) for an employer “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the Act. Section 7​ guarantees employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

In a recent , published on June 26, 2026, the National Labor Relations Board (NLRB) Division of Advice departed from the former NLRB General Counsel’s 2023 position (taken during the Biden administration) that overbroad noncompete agreements may violate the Act because they purportedly chill employees from exercising their Section 7 rights. The Division of Advice was asked to opine whether noncompete agreements violated the Act, as alleged in charges filed by two former employees who began working for a competitor. The Division of Advice concluded that the noncompete agreements did not violate the Act, stating that the current “General Counsel is of the view that non-compete agreements do not as a general matter impact employees’ rights under Section 7.  Accordingly, the non-compete language [under review] does not violate Section 8(a)(1).” The advice memo, which is not legally binding, recommended dismissal of the charges.

Although the advice memo may deter the filing and/or NLRB prosecution of ULP charges based on noncomplete agreements (at least under the current presidential administration), it does not dictate the enforceability of noncompete agreements, which is governed primarily by applicable state law. (See our recent July 13, 2026, article, “Noncompete Agreements in 2026: A Federal and State Overview,” for an overview of the current noncomplete landscape.) Employers, therefore, should regularly review their restrictive covenant agreements to help ensure they are enforceable under applicable law.