Jun 3, 2025, 19:58 PM by Neil Reichenberg, HRCI Contributing Writer

A federal court in Texas has vacated portions of the EEOC's guidance on harassment related to sexual orientation and gender identity, affecting Title VII interpretations. Additional updates include changes to the classification of independent contractors under the FLSA, the commencement of EEO-1 data collection, and the announcement of the 2026 HSA contribution limits.

The U.S. District Court for the Northern District of Texas has invalidated part of the EEOC’s guidance on harassment that addressed harassment based on sexual orientation and gender identity. A subcommittee of the House Committee on Education and the Workforce held a hearing on the status of independent contractors under the Fair Labor Standards Act (FLSA). EEOC announced that the EEO-1 data collection has begun with a June 24^th deadline for private sector employers with at least 100 employees to file the report. The IRS has released the 2026 health savings account (HSA) contribution limits.

 

Court Invalidates Part of EEOC Harassment Guidance – The U.S. District Court for the Northern District of Texas has, in the case of State of Texas v. Equal Employment Opportunity Commission, invalidated a portion of the EEOC’s guidance on harassment. In granting summary judgment to the State of Texas, the District Court concluded that the “EEOC exceeded its statutory authority by issuing Enforcement Guidance requiring bathroom, dress, and pronoun accommodations inconsistent with the text, history, and tradition of Title VII and recent Supreme Court precedent.”

 

In 2024, EEOC issued the Enforcement Guidance on Harassment in the Workplace that includes a section on sex discrimination designed to communicate the Commission’s position and serve as a resource. The Commission noted that the Guidance does not “have the force and effect of law” and does not bind the public. The Guidance states that “sex-based harassment includes harassment based on sexual orientation or gender identity, including how that identity is expressed.” Repeated use of a name or pronoun inconsistent with a person’s gender identity as well as denial of bathroom or other sex-segregated facility consistent with someone’s gender identity would, according to the Guidance be considered sexual harassment.

 

The State of Texas brought this case challenging the Enforcement Guidance on several grounds. While the case was pending, President Trump took office and issued Executive Order 14168, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government” that directed the EEOC to rescind the Enforcement Guidance. However, since President Trump fired two EEOC Commissioners, the Commission lacks the required quorum needed to modify the Enforcement Guidance.

 

The District Court stated that the “Enforcement Guidance lacks statutory or jurisprudential authority to expand Title VII’s definition of sex to include” sexual orientation and gender identity. The District Court noted that it is the role of Congress to amend Title VII, which it has not yet done and by doing so in the Enforcement Guidance, the EEOC “contravenes Title VII’s plain text.”  

 

In response to the District Court’s ruling, the EEOC issued a release noting that Acting Chair Andrea Lucas opposed the Enforcement Guidance’s position that “harassing conduct under Title VII includes denial of access to a bathroom or other sex-segregated facility consistent with an individual’s gender identity and that harassing conduct includes repeated and intentional use of a name or pronoun inconsistent with an individual’s known gender identity.” To note those portions of the guidance vacated by the district court, the EEOC has labeled and shaded those portions of the guidance on the EEOC’s website. The Administration is not expected to appeal the decision by the District Court.

 

House Subcommittee Holds Hearing on Independent Contractors – The House Subcommittee on Workforce Protection of the Committee on Education and the Workforce held a hearing on “Empowering the Modern Worker.” Representative Ryan Mackenzie (R-PA) chairman of the subcommittee stated that the hearing was designed to consider the challenges faced by those who choose to be independent contractors due to worker classification issues under the Fair Labor Standards Act (FLSA). He noted that many independent contractors would like to maintain that status while also having access to benefits employees are given. He criticized the 2024 independent contractor rule which he believed “imposed a confusing and complicated six-factor economic realities test to determine worker classification.”

 

Vice Ranking Member Greg Casar (D-TX) expressed support for “real, legitimate independent contractors” while also noting that the Department of Labor has found that “millions of American workers today are illegally misclassified as contractors when they really are employees…stripped of their right to overtime, minimum wage, and other basic protections.” He declared that the 2024 independent contractor rule merely restored the rules that had been in place for over 80 years.

 

Representative Kevin Kiley (R-CA), a member of the House Education and the Workforce Committee introduced two bills that would amend the FLSA including the Modern Worker Empowerment Act (H.R. 1319) and the Modern Worker Security Act (H.R. 1320). H.R. 1319 would establish a test for determining whether a worker is an independent contractor and H.R. 1320 would create a safe harbor allowing companies to provide portable benefits to independent contractors without the risk of their being reclassified as employees. These bills have been referred to the Committee on Education and the Workforce.

 

An individual under the Modern Worker Empowerment Act would be deemed an independent contractor of a company if the company does not exercise significant control over the details of the way the work is performed and while performing the work, the independent contractor exercises “managerial skill, business acumen or professional judgment.” The bill would not allow several factors to be considered when determining independent contractor status including whether the company requires compliance with legal, statutory, regulatory requirements, health, and safety standards, maintaining insurance, or meeting performance standards such as deadlines.

 

The Modern Worker Security Act would allow work-related benefits similar to those provided to full-time employees such as health insurance, retirement savings, workers compensation, skills training, professional development, paid leave, and disability coverage to be provided without losing independent contractor status. The company would be allowed to make financial contributions to such benefits.

 

Several lawsuits challenging the 2024 independent contractor rule are currently on hold while the Department of Labor considers whether to rescind the rule.

 

EEO-1 Data Collection Open – The EEO-1 data collection is now open, and reports must be filed by June 24, 2025. The Equal Employment Opportunity Commission (EEOC) has collected workforce demographic data since 1966. Private employers covered by Title VII of the Civil Rights Act of 1964 that have at least 100 employees must file the report. Additionally, under the Office of Federal Contract Compliance (OFCCP) regulations, certain federal contractors with at least 50 employees also need to file the EEO-1 report.

 

EEOC Acting Chair Andrea Lucas issued a statement cautioning employers “not to take any employment actions based on, or motivated in whole or in part by, an employee’s race, sex, or other protected characteristics…Different treatment based on race, sex, or another protected characteristic can be unlawful discrimination, no matter which employees or applicants are harmed.”

 

2026 HSA Contribution Limits Announced – The Internal Revenue Service (IRS) announced in Revenue Procedure 2025-19 that the health savings account contribution limits in 2026 would be increased $100 to $4,400 for self-only coverage under a high deductible plan. For family coverage under a high deductible plan the contribution limit would be increased by $200 to $8,750. An additional $1,000 catch up contribution is allowed for those who are at least 55 in 2026 and not enrolled in Medicare.

 

The IRS defines a high deductible health plan for 2026 as a health plan with an annual deductible that is not less than $1,700 for self-only coverage or $3,400 for family coverage, and for which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $8,500 for self-only coverage or $17,000 for family coverage.

 

Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues, and an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at neilreichenberg@yahoo.com.