- Illegible Fine Print May Not Invalidate Arbitration Agreementon February 3, 2026 at 1:02 PM
Evangelina Yanez Fuentes applied for a job at Empire Nissan and was given an employment application packet, which included a document titled "Applicant Statement and Agreement." This document contained an arbitration provision requiring arbitration of all disputes arising from her employment. The agreement was printed in a very small, blurry font that was nearly illegible, consisting of a dense, lengthy paragraph filled with complex sentences, legal jargon, and statutory references.
Fuentes was given only five minutes to review the entire packet, was told to hurry because the drug testing facility was closing, and was informed that the documents related to her application, references, and drug testing. She was not told about the arbitration clause, given a chance to ask questions, or provided a copy after signing. The agreement also stated that any modifications must be in writing and signed by the company's president.
Later, while employed, Fuentes signed two nearly identical confidentiality agreements at Empire Nissan's request. These prohibited her from usurping business opportunities or disclosing confidential information and trade secrets. They allowed Empire Nissan to seek injunctions, legal remedies, and attorney fees in the event of a breach, and stated that they superseded all prior agreements on those topics. The copies in the record lacked the president's signature.
After working for about two and a half years, Fuentes took medical leave for cancer treatment. A year later, she requested a brief extension, but Empire Nissan terminated her employment. Fuentes then filed a lawsuit alleging wrongful discharge and related claims. Empire Nissan moved to compel arbitration based on the agreement in the application packet.
The trial court denied Empire Nissan's motion to compel arbitration. It found a high degree of procedural unconscionability due to the agreement's illegible format, complex language, and the rushed circumstances under which Fuentes signed it without a meaningful opportunity to review or negotiate.
For substantive unconscionability, the court found a low to moderate degree, citing the "fine-print terms" as indicative of unfairness (relying on precedents like OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111,128 and Davis v. TWC Dealer Group, Inc.(2019) 41 Cal.App.5th 662,674) and interpreting the confidentiality agreements as carving out claims (like unfair competition or trade secret violations) that only Empire Nissan would bring, exempting them from arbitration. The court did not address Fuentes's separate argument that no valid agreement existed due to the illegible format and presentation precluding her assent.
The Court of Appeal reversed the trial court's denial and directed it to grant the motion to compel arbitration. The Supreme Court of California, in turn, reversed the Court of Appeal's judgment and remanded the case to the trial court for further proceedings in the case of Fuentes v. Empire Nissan -S280256 (February 2026)
The Court of Appeal held that illegibility and small print were relevant only to procedural unconscionability, not substantive, disagreeing with Davis and criticizing its interpretation of "fine-print terms" in Kho as referring to font size rather than hidden unfair terms. Relying on a strong policy favoring arbitration, it interpreted the confidentiality agreements as requiring arbitration of all claims, including those under them, because any modification to the arbitration agreement needed the president's signature, which was absent. Thus, it found no substantive unconscionability and declined to address procedural unconscionability.
The Supreme Court disagreed, clarifying that a contract's format (like small, illegible print) is generally irrelevant to substantive unconscionability, which focuses on the fairness of terms, but high procedural unconscionability (present here due to oppression from the rushed process and surprise from the illegible, jargon-filled text) requires close scrutiny of terms for one-sidedness.
It found ambiguity in whether the confidentiality agreements superseded the arbitration mandate for employer-favored claims, rejecting the Court of Appeal's pro-arbitration presumption as violating equal treatment of contracts.
The Supreme Court noted an unresolved factual question about whether the president signed the confidentiality agreements, lacking a record because Empire Nissan never raised it below. It also held the Court of Appeal erred by directing arbitration without allowing the trial court to consider Fuentes's unaddressed argument that no valid contract formed due to precluded assent.
The case was remanded for the trial court to resolve these issues, potentially with further evidence and briefing, emphasizing that even low substantive unconscionability could render the agreement unenforceable given the high procedural element. Chief Justice Guerrero dissented, arguing the agreements required arbitration and that remand was unjustified without party briefing on certain issues.
- DOI Proposes California FAIR Plan Legislationon February 3, 2026 at 1:01 PM
The California Insurance Commissioner and Assembly Insurance Committee Chair Lisa Calderon announced new legislation to overhaul the FAIR Plan, strengthening claims handling, expanding coverage options, and improving transparency for wildfire survivors. The Make It FAIR Act enacts key reforms identified in the California Department of Insurance’s recent Report of Examination, which found the FAIR Plan had failed to comply with 17 critical recommendations related to financial condition, corporate governance, and consumer protections.
The Department’s Report of Examination - the most comprehensive review of the FAIR Plan in decades - revealed systemic problems that have left wildfire survivors struggling with delays, denials, and inconsistent claims decisions, particularly after the 2025 Los Angeles wildfires, the largest urban wildfire disaster in state history.
The Make It FAIR Act would improve coverage and claims handling by the insurance company-run FAIR Plan. The legislation would enact reforms outlined in a comprehensive Report of Examination completed last month by the Department. The comprehensive examination evaluated the FAIR Plan’s financial conditions, corporate governance, and controls to protect policyholders across 32 areas - finding that in more than half of them, the FAIR Plan had not started or fully implemented the Department’s recommendations. The legislation would require the FAIR Plan to make significant operational and governance changes to meet Californians’ needs, while market improvements take hold, such as:
- - Implementing a more comprehensive homeowners coverage option like other insurance companies. Current FAIR Plan residential policyholders must buy a separate insurance policy — at an additional cost — to have coverage for water damage, liability if someone is injured on their property, and other standard coverages. This is unacceptable, and the FAIR Plan has been fighting Commissioner Lara in court to prevent this change since 2019.
- - Hiring more staff to manage its increasing operational needs and workload as well as expeditiously address consumer claims and complaints.
- - Expediting policyholders in returning to the regular market by improving clearinghouse programs created by the State Legislature. The Department found only some insurance companies participate in the program, undermining the Legislature’s intent in creating the programs.
- - Adopting a three-to-five-year strategic plan, like other insurance companies, to anticipate changes in the market, improve policy handling, and assist people in leaving the FAIR Plan under Commissioner Lara’s Sustainable Insurance Strategy.
- - Improving transparency by providing public access to meetings and documents of the FAIR Plan’s Governing Committee and Subcommittees, including mandating the creation of an Annual Report discussing the year in review, governance updates, premium rate information, catastrophe response plans, strategic plans, and initiatives to enhance and improve policyholder service and related metrics.
- - Prioritizing policyholders’ resilience from climate change by adopting a formal climate risk assessment, while reporting climate-related financial risks in line with how more than 85% of the national insurance markets report risks based on the standards established through the National Association of Insurance Commissioners.
- - Creating a formal capital and liquidity management plan like other insurance companies to protect from unexpected events such as major wildfires or storms.
The Make It FAIR Act builds on reforms the Insurance Commissioner advanced after the Los Angeles wildfires, including new wildfire safety grants, expanded insurance discounts, faster claim payouts for survivors, extended non-renewal protections for businesses, stronger FAIR Plan financial safeguards, and modernized insurance laws to increase transparency and accountability.
- P/C Market to Have Lowest Net Combined Ratio in Decadeon February 2, 2026 at 12:24 PM
The U.S. property/casualty (P/C) insurance industry exhibited resilience in 2025 and is forecast to have its lowest Net Combined Ratio (NCR) in over a decade. This comes despite the Los Angeles wildfires in January 2025, ongoing tariffs, and other geopolitical risks entering the fray. These findings are detailed in P/C Economics and Underwriting Projections: A Forward View from the Insurance Information Institute (Triple-I) and Milliman, a collaborating partner.
“Overall, the P/C insurance industry and the broader U.S. economy remain stable,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I. “However, despite stronger-than-expected GDP growth in the third quarter, a closer look at the data suggests the U.S. economy may be increasingly vulnerable to rising economic, political, and geopolitical uncertainty. In particular, P/C replacement costs could still see significant increases in 2026, weighing on overall P/C performance.” Léonard added that a rise in the unemployment rate toward the critical 5.0% level over the next six months could trigger an economic contraction or even a recession.
Key Highlights:
- - The collection of economic data was impacted by the U.S. government shutdown in Q4 2025, leading to data delays and gaps. Available economic data points to P/C underlying growth slowing, particularly for premium volume. Additionally, political and geopolitical risks are increasing.
- - P/C Aggregate Net Premium Growth across all P/C lines for 2025 is expected to be 5.9%, further slowing relative to 2024’s growth rate.
- - Homeowners’ 2025 Net Combined Ratio is forecast at 99.6 points, on par with 2024 despite losses from the Los Angeles fires in Q1 2025
- - Personal Auto’s 2025 Net Combined Ratio is forecast at 94.4 points, an improvement from 2024, while Net Written Premium Growth is expected to have slowed to 3.6%, the lowest level since 2020.
- - General Liability and Commercial Auto are the only major lines forecast to remain above a Net Combined Ratio of 100 points, though gradual improvements are expected for both lines in 2026–2027.
- - Workers’ Compensation continues to perform strongly, with Net Combined Ratios forecast to range from high 80s to low 90s in 2025-2027.
“We’re on track to achieve the lowest Net Combined Ratio in over a decade, thanks in part to a hurricane season that spared the U.S. and strong homeowners performance, even after the Los Angeles fires in Q1 2025,” said Patrick Schmid, Ph.D., chief insurance officer at Triple-I. “Growth in personal lines premiums remains solid, and the narrowing gap between personal and commercial lines performance points to a cautiously optimistic outlook for the industry."
Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, added, “General Liability faces continued challenges. Our 2025 Net Combined Ratio is forecast to be similar to 2024, among the worst in over a decade. Losses are high, with Q3 direct incurred loss ratios being the highest in at least 25 years,” he said. “While conditions may improve in 2026-2027, profitability remains a hurdle. Our General Liability’s NCR expectations have risen following a challenging Q3, reflecting ongoing pressure in the segment. While some coverages are experiencing soft market conditions, aggregate premiums have been growing, but not enough to keep pace with loss trends. We anticipate additional premium growth will be needed to improve General Liability profitability.”
Workers Compensation is expected to continue delivering favorable underwriting results through 2025, supported by stable Net Written Premium trends, disciplined risk management, and favorable prior accident year development. “NCCI’s latest loss ratio trends continue to show declines,” said Donna Glenn, NCCI chief actuary. “In the current environment, modest year-to-year decreases are still expected.” Glenn noted that “while there have been a few rate increases filed in NCCI states, every state has its own story, and based on the latest data, NCCI does not anticipate any imminent reversal of current trends.”
- New Section 111 Reporting Audit Process Begins in 2026on February 2, 2026 at 12:24 PM
CMS Section 111 refers to the Medicare Secondary Payer (MSP) mandatory reporting requirements under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA). It obligates Responsible Reporting Entities (RREs) - such as liability insurers, no-fault insurers, workers' compensation plans, and self-insured entities - to report information about Medicare beneficiaries who have primary coverage or receive settlements, judgments, awards, or other payments (including Total Payment Obligation to the Claimant or TPOC, and Ongoing Responsibility for Medicals or ORM). The goal is to ensure Medicare acts as a secondary payer where appropriate and to facilitate recovery of conditional payments.
This year, audits become part of CMS's enforcement mechanism for Section 111 compliance, specifically targeting Non-Group Health Plans (NGHP) like workers' compensation, liability, and no-fault insurance. These audits focus on verifying timely reporting of MSP occurrences. According to official CMS guidance, audits commenced in January 2026 and are conducted quarterly thereafter.
New Audit Process
- - Selection: CMS randomly selects 250 new MSP records per quarter from all accepted Section 111 submissions during the review period, plus records from non-Section 111 sources (e.g., self-reports from beneficiaries or providers). The sample is proportionate to the volume of Group Health Plan (GHP) and NGHP records.
- - Focus Areas: Audits check for timeliness, requiring reports within 365 days of key dates like the settlement date, funding delayed beyond TPOC date, or assumption of ORM. Non-Section 111 records are also reviewed if no matching Section 111 report exists within that window.
- - Compliance Review: RREs are notified only if potential non-compliance is identified. They can provide mitigating evidence (e.g., documentation of good-faith efforts). If non-compliance is confirmed, CMS issues an Informal Notice, followed by a Notice of Proposed Determination (with 60 days to request a hearing), and potentially a Final Determination.
- - Timeline Notes: The compliance "clock" started on October 11, 2024, for reportable events on or after that date. Enforcement via Civil Money Penalties (CMPs) applies prospectively from October 11, 2025. First notices of potential CMPs may issue as early as March 2026.
Informal Notice- Intention to Impose a Civil Money Penalty
- - First letter (Notice) issued when a noncompliant record was identified on CMS’ quarterly audit.
- - A CMP is not being assessed at this point, rather, the RRE’s noncompliant record is identified along with the associated information so that an RRE may investigate the record.
- - The process to submit mitigating information, in an attempt to explain or defend technical or administrative issues resulting in the noncompliance is outlined in this letter. Mitigating evidence must be submitted to CMS within 30 days of receipt of the Informal Notice. This is the opportunity for RREs to explain why a CMP should not be imposed.
As of the 2026 adjustment, the maximum daily penalty for NGHP reporting non-compliance is $1,512 (up from $1,428 in 2024). Late Reporting Timeframe Penalty per Day:
- - More than 1 year but less than 2 years late $357 per day.
- - More than 2 years but less than 3 years late $714 per day.
- - More than 3 years late $1,512 per day.
- - Maximum per instance: $365,000
More information about the new audit process, and compliance with Section 111 is available on the CMS website.
- Lien Consolidation Orders Require Reasons & Summary of Evidenceon January 29, 2026 at 2:26 PM
Josue Barrios filed a workers' compensation claim at the Van Nuys WCAB against Nagatoshi Produce USA, Inc. and its insurer, Truck Insurance Exchange. Several medical lien claimants including Tri-County Medical Group, Inc., Tri-City Health Group, Inc., Komberg Chiropractic, and Edward Komberg, D.C. became involved as real parties in interest in the case.
Defendant Farmers Insurance Exchange (not originally part of Barrios's case but acting on behalf of multiple carriers) filed a Petition for Consolidation and Stay of Liens, alleging that the lien claimants had engaged in improper practices, such as unlawful patient referrals in violation of Labor Code sections 139.3, 139.32, and 3215, and issuing bills or reports with material misrepresentations under section 3820. Multiple other insurance carriers joined this petition, leading to multiple hearings, however no evidence was formally admitted at these hearings, and issues were not explicitly framed for decision.
On October 24, 2025, PWCJ Jeffrey Marrone issued an Order of Consolidation, Designation of Master File, and Notice of Hearing (Consolidation Order), consolidating hundreds of cases for discovery purposes under California Code of Regulations, title 8, section 10396 (Rule 10396), staying the liens, and assigning WCJ Tammy Homen as the judge for the consolidated matter.
The lien claimants petitioned to disqualify WCJ Homen, alleging bias and an undisclosed conflict because her husband, Norman Homen, is a workers' compensation attorney who had previously referred clients to the lien claimants and had social interactions with Komberg. They also sought reconsideration of the Consolidation Order, arguing it lacked factual findings, failed to show a causal connection between the consolidated cases and the allegations, and violated Rule 10396(a)(3) by not considering potential prejudice or delays. The carriers filed an answer opposing the petition, and both WCJ Homen and PWCJ Marrone submitted reports recommending denial.
In response to the disqualification petition, WCJ Homen filed a Report and Recommendation denying any conflict, stating she and her husband had no financial interest in or involvement with the lien claimants' businesses, she lacked knowledge of his referrals or clients in these cases, and mere industry interactions did not constitute bias. She noted the small size of the workers' compensation community and that she had not yet presided over any hearing or expressed opinions on the merits.
PWCJ Marrone's report on the reconsideration petition affirmed that he had considered Rule 10396's factors (e.g., common issues, complexity, prejudice, and efficiency) but provided only summary conclusions without detailed legal or factual support.
The Workers' Compensation Appeals Board issued a multifaceted decision. It denied the lien claimants' Petition for Disqualification of WCJ Homen, adopting and incorporating her report. It dismissed the Petition for Reconsideration of the Consolidation Order, treating it instead as a Petition for Removal, which it granted. As its Decision After Removal, the WCAB rescinded the Consolidation Order and returned the matter to the trial level for further proceedings consistent with its opinion in the case of Barrios v Nagatoshi Produce -SAU9000031 (January 2026).
The WCAB first addressed the disqualification petition, finding no basis under Labor Code section 5311 or Code of Civil Procedure section 641. It agreed with WCJ Homen that neither she nor her husband had a financial interest, employment relationship, or other disqualifying ties to the lien claimants. The board emphasized that assumptions about bias were insufficient without detailed facts showing enmity or an unqualified opinion on the merits, and that social or industry interactions in the small workers' compensation community could not broadly disqualify judges. The lien claimants' subjective perceptions did not meet the standard for impartiality doubts.
For the Consolidation Order, the WCAB found the order violated due process and Labor Code section 5313, which requires a summary of evidence and reasons for determinations, as supported by en banc precedent like Hamilton v. Lockheed Corporation (2001) 66 Cal.Comp.Cases 473 (requiring opinions based on admitted evidence and substantial evidence). Although PWCJ Marrone's report attempted to cure this by summarizing common issues (e.g., referral violations and misrepresentations), it lacked specific citations to law or facts connecting the hundreds of cases to the allegations, rendering meaningful appellate review impossible.
The WCAB distinguished prior cases like Kenney v. Seguoyah, Inc. 2023 Cal.Wrk.Comp. P.D. LEXIS 37, *3 (where consolidation was for a narrow, specific issue) and Harvard Surgery Center v. WCAB (Yero) (2005) 70 Cal.Comp.Cases 1354 (emphasizing the need for good cause), noting that vague references to statutes were insufficient to justify broad discovery without risking abuse.
- New QME Process Regulation Section 55.1 in Effect on April 1on January 29, 2026 at 2:26 PM
The Division of Workers’ Compensation (DWC) reminds all applicants for reappointment as a Qualified Medical Evaluator (QME) to fully satisfy the continuing education requirements of Labor Code section 55.1. by April 1, 2026.
On February 28, 2024, the Office of Administrative Law (OAL) approved DWC’s regulatory action which adopted new regulation § 55.1. That regulation enacted new educational requirements for Qualified Medical Evaluators seeking reappointment after April 1, 2026. The new criteria include:
The ability to hold on site educational programs virtually;
The requirement of 16 hours of continuing education for reappointment as a QME;
Minimum hour requirements for continuing education in specific areas as follows:
A minimum of 4 hours of instruction in disability impairment rating;
A minimum of 3 hours of instruction in medical-legal report writing;
A minimum of 2 hour of instruction in anti-bias training which meets the qualifications outlined in Section 11(h);
A minimum of 2 hours of instruction consisting of a review of workers' compensation case law;
A minimum of 1 hour of instruction in proper application of the medical-legal fee schedule or in QME adherence to regulatory clerical requirements.
The ability of a physician to earn a maximum of 2 hours continuing education credit by having their reports reviewed by an approved educational provider.
As of April 1, 2026 regulation § 55.1 will be fully effective. All applications for reappointment as a Qualified Medical Evaluator must fully satisfy the continuing education requirements of section 55.1. The full text of the regulation can be accessed using the Title 8 search.
A list of continuing education providers, some of whom are offering classes that have been accredited to meet the requirements of regulation 55.1, are listed on the DWC website.
QMEs seeking recertification are advised to make sure that the continuing education provider that they choose is in compliance with the requirements of regulation § 55.1.
- Fed Court Uses Rule 23(d) to Limit Arbitration Opt Out Abuseon January 28, 2026 at 3:52 PM
The plaintiffs, Bo Avery, Phoebe Rogers, Kristy Camilleri, and Jill Unverferth, alleged that TEKsystems, a professional staffing agency that places IT consultants with business clients, had misclassified them as exempt from overtime laws, failing to pay overtime wages or provide required meal and rest breaks in violation of California labor laws. The case was filed initially in California state court but was removed to federal court by TEK. Over the ensuing months, the parties engaged in extensive discovery.
In September 2023, TEK internally approved expanding its longstanding mandatory arbitration policy - previously applied only to external consultants - to include internal employees like the recruiters.
The rollout communications criticized class actions as wasteful, inefficient, and primarily benefiting attorneys, while emphasizing arbitration's efficiency. They were sent during the holiday season, contained inconsistencies about opt-out procedures and deadlines, and suggested employees consult their own attorneys at personal expense without mentioning free access to class counsel. A separate email targeted putative class members with an opt-out form specifically for remaining in the class action.
Plaintiffs moved for class certification on October 6, 2023, with briefing completing by December 14, 2023. Just five days later, on December 19, 2023, TEK rolled out a new mutual arbitration agreement to its internal employees, including putative class members. This agreement, which covered the claims in the lawsuit, was presented via email and deemed accepted through continued employment after December 31, 2023, unless employees opted out or quit.
Of 164 recipients, only 41 opted out to stay in the class. The class was certified on February 13, 2024, with notices issuing on April 16, 2024, and an opt-out deadline of June 15, 2024. On June 10, 2024 - after plaintiffs had moved for partial summary judgment and just days before the notice period closed - TEK filed a motion to compel arbitration against class members bound by the agreement.
The federal district court in the Northern District of California, denied TEK's motion to compel arbitration. It found that TEK's communications rolling out the arbitration agreement threatened the fairness of the litigation by being misleading and omitting key information, such as the availability of free consultation with class counsel and the status of the ongoing class certification process.
The court concluded that these actions subverted Federal Rule of Civil Procedure 23's opt-out mechanism for class actions, effectively turning it into an opt-in process where inaction bound employees to arbitration and excluded them from the class. Invoking its broad authority under Rule 23(d) to manage class proceedings and ensure fairness, the district court refused to enforce the agreement. As an alternative basis, it also determined that TEK had waived its right to arbitrate by delaying the rollout for over 22 months into the litigation, engaging in a "wait-and-see" approach.
The Ninth Circuit Court of Appeals affirmed the district court's denial of the motion to compel arbitration, declining to address the waiver issue and focusing instead on the Rule 23(d) grounds in the published case of Avery v TekSystems -3:22-cv-02733-JSC (January 2026)
The panel held that district courts possess the duty and expansive authority under Rule 23(d) to oversee class actions, including the power to invalidate arbitration agreements obtained through communications that undermine the integrity of the proceedings.
The appellate court's rationale emphasized adherence to Supreme Court precedents, such as Gulf Oil Co. v. Bernard, 452 US 89 - Supreme Court 1981 and Hoffmann-La Roche Inc. v. Sperling, 493 US 165 - Supreme Court 1989 which grant district courts discretion to regulate contacts with class members and protect against abuses that could coerce or mislead them. The panel found TEK's rollout communications to be inherently threatening to fairness: they disparaged class actions repeatedly as inefficient and attorney-enriching, were timed disruptively during the holidays, included conflicting instructions on how to opt out (such as deeming acceptance via continued employment while also requesting signatures), and implied personal legal costs without disclosing class counsel's role.
These elements, combined with omissions about the lawsuit's progress, risked confusing or pressuring class members into forgoing their rights under Rule 23's opt-out framework, which presumes inclusion unless affirmatively excluded.
The court aligned its holding with similar decisions from the Fourth, Sixth, and Eleventh Circuits, rejecting TEK's argument that the Federal Arbitration Act preempted such oversight by noting that Rule 23(d) applies neutrally to all contracts and does not disfavor arbitration. Furthermore, the arbitration agreement's delegation clause - incorporating JAMS Rule 11(b), which assigns arbitrability disputes to the arbitrator - did not preclude the district court's review, as the challenge targeted the agreement's overall enforceability under procedural fairness rules rather than a specific provision.
Ultimately, the Ninth Circuit concluded that invalidating the agreement was a narrowly tailored remedy to restore the proper opt-out process, affirming the district court's decision to safeguard the class action's integrity.
- Current Status of Non-Compete Clauses in Employment Contractson January 28, 2026 at 3:51 PM
The Federal Trade Commission (FTC) issued a final rule in April 2024 banning most non-compete agreements in employment contracts, with an effective date of September 4, 2024. However, in the case of Ryan LLC v. FTC (N.D. Tex., Case No. 3:24-cv-00986), U.S. District Judge Ada Brown issued a preliminary injunction in July 2024 blocking the rule's enforcement, and on August 20, 2024, she issued a final order setting aside the rule nationwide, declaring it unlawful under the Administrative Procedure Act.
The FTC appealed this decision to the U.S. Court of Appeals for the Fifth Circuit (Case No. 24-10951) on October 18, 2024. Briefing proceeded into early 2025, with the FTC filing its opening brief on January 2, 2025, and appellees (including Ryan LLC and the U.S. Chamber of Commerce) responding on February 3, 2025. The FTC then requested and received stays of the proceedings in March and July 2025, extending until September 8, 2025.
On September 5, 2025, following a change in presidential administration, the FTC filed an unopposed motion to voluntarily dismiss the appeal under Federal Rule of Appellate Procedure 42. The Fifth Circuit granted the motion and dismissed the appeal on September 8, 2025, terminating the case. The FTC also dismissed a related appeal in the Eleventh Circuit (Properties of the Villages v. FTC) around the same time, effectively acceding to the vacatur of the non-compete rule.
As of January 2026, the district court's order remains in effect, and the FTC's non-compete rule is not enforceable nationwide. The FTC has shifted focus to case-by-case enforcement against unfair non-competes under existing antitrust laws, rather than pursuing a blanket ban. There are no active appeals in this matter, though state laws on non-competes vary and may still restrict their use in certain jurisdictions.
California has one of the strictest policies in the U.S. against non-compete clauses in employment contracts, prioritizing employee mobility and open competition. Under Business and Professions Code Section 16600, any contract that restrains someone from engaging in a lawful profession, trade, or business is generally void and unenforceable. This has been the longstanding rule, but recent legislation has further reinforced and expanded these protections.
In January 2024, two new laws took effect to strengthen the ban:
- - Senate Bill 699 (now codified as Business and Professions Code Section 16600.5): Declares non-compete agreements unlawful (not just void) and prohibits employers from entering into or enforcing them, even if the agreement was signed outside California or for employment outside the state. It also creates a private right of action for employees to sue for damages, injunctive relief, and attorneys' fees.
- - Assembly Bill 1076 (now codified as Business and Professions Code Section 16600.1): Explicitly prohibits non-compete clauses and required employers to notify current and certain former employees (employed after January 1, 2022) by February 14, 2024, that any existing non-compete provisions are void. Failure to provide this notice can result in civil penalties of up to $2,500 per violation.
While non-competes are largely prohibited in the employment context, there are narrow exceptions under California law:
- - Sale of a business: Non-competes may be enforceable when tied to the sale of a business, goodwill, or ownership interest (Business and Professions Code Sections 16601 and 16602.5).
- - Dissolution of partnerships or LLCs: Limited restrictions may apply upon dissolution or dissociation (Section 16602).These exceptions are interpreted narrowly by courts, and the agreements must be reasonable in scope, duration, and geography to be upheld.
The federal FTC's attempted nationwide ban on non-competes was struck down in 2024 and abandoned in 2025, but this does not affect California's independent prohibitions, which remain in full force. Employers are advised to review and revise contracts to ensure compliance, focusing instead on alternatives like non-solicitation clauses (which may be enforceable if narrowly tailored) or enhanced trade secret protections.
For specific situations, consulting a California employment law attorney is strongly recommended, as case law continues to evolve and this is not an authoritative and complete narrative of this law.
- The DWC Proposes New Regulation Restricting Depo Feeson January 27, 2026 at 3:30 PM
The Division of Workers’ Compensation (DWC) has posted proposed ranges for attorney deposition fees to its online forum where members of the public may review and comment on the proposals.
In the California workers’ compensation system, the Workers Compensation Appeals Board (WCAB), a workers’ compensation judge, or any party to the action or proceeding may request the deposition of a witness in matter before the WCAB, pursuant to Labor Code section 5710. If either the employer or the insurance carrier requests that an injured employee be deposed, that injured employee is entitled to receive, among other benefits, “a reasonable allowance for attorney’s fees” if they are represented by an attorney.
Judges have discretion when awarding the fees, which are required to be paid by employer or its insurer. Fees are currently governed by local policy established by presiding judges in each district, which serve as a guide to the parties, but individual attorneys’ fees awards are subject to litigation before WCAB judges. Pursuant to section 5710(b)(4) the Administrative Director of the Division of Workers’ Compensation (DWC) is charged with determining “the range of reasonable fees to be paid.”
The proposed regulation will establish the range of reasonable fees allowable for attorneys representing injured employees when employers or insurers request their depositions. The deposition shall not exceed the following amounts:
(1) An amount not to exceed $500 per hour for attorneys certified as Workers’ Compensation Specialists by the State Bar of California;
(2) An amount not to exceed $450 per hour for attorneys with five or more years of experience in Workers’ Compensation matters in the state of California;
(3) an amount not to exceed $400 per hour for attorneys with fewer than five years of experience in workers’ compensation matters in the state of California;
(4) an amount not to exceed $250 per hour for non-attorney representatives as identified pursuant to Labor Code section 10751.
Incremental Billing Requirements:
(1) Fees authorized under this section shall be billed on an incremental, time-based basis, reflecting actual time reasonably spent preparing the injured employee for deposition and attending the deposition.
(2) Billing increments shall not exceed one-tenth (0.1) of an hour.
(3) Minimum or flat fees are not permitted, and attorneys or representatives shall not bill for time not actually expended.
Fees shall not be sought or awarded for activities including, but not limited to:
(1) General file review;
(2) Travel time or travel expenses;
(3) Review of deposition transcripts;
(4) Administrative or clerical tasks.
The forum can be found online on the DWC forums web page under “current forums.” Comments will be accepted until 5 p.m. on February 13, 2026.
- BLS Reports Employer-Reported Workplace Injuries Down 3.1%on January 27, 2026 at 3:30 PM
According to a new U.S. Bureau of Labor Statistics report, private industry employers reported 2.5 million nonfatal workplace injuries and illnesses in 2024, down 3.1 percent from 2023. This is the lowest number of employer-reported injuries and illnesses for this data series going back to 2003.
This reduction was largely driven by a 26.0% drop in illness cases, which totaled 148,000, including a significant 46.1% decrease in respiratory illnesses to 54,000 - the lowest level since 2019.
The overall incidence rate for total recordable cases (TRC) in private industry fell to 2.3 cases per 100 full-time equivalent (FTE) workers, down from 2.4 in 2023, marking the lowest rate in over two decades. Injuries accounted for the majority, with an incidence rate of 2.2 per 100 FTE workers, while the illness rate decreased to 13.9 cases per 10,000 FTE workers from 19.0 in 2023, and respiratory illnesses dropped to 5.1 per 10,000 FTE workers.
Notable declines in TRC incidence rates occurred across several sectors, including information (0.7 per 100 FTE workers, down from 1.0), health care and social assistance (3.4 per 100 FTE workers, down from 3.6), retail trade, manufacturing, and real estate and rental and leasing.
No industry sector experienced an increase in its TRC rate.
For the biennial period of 2023-2024, cases involving days away from work (DAFW) totaled 1.8 million, comprising 61.5% of days away, restricted, or transferred (DART) cases, with an annualized incidence rate of 86.6 per 10,000 FTE workers and a median of 8 days away. Days of job transfer or restriction (DJTR) cases numbered 1.1 million, or 38.5% of DART cases, with an incidence rate of 54.2 per 10,000 FTE workers and a median of 15 days.
Leading causes of DART cases included overexertion, repetitive motion, and bodily conditions (946,290 cases) and contact incidents (860,050 cases), while exposure to harmful substances and environments resulted in 224,450 cases, with 87.6% requiring at least one day away from work.
Under the updated Occupational Injury and Illness Classification System (OIICS), a new category for novel coronavirus (COVID-19) cases was introduced, showing an annualized DAFW incidence rate of 5.6 per 10,000 FTE workers in private industry for 2023-2024. The highest COVID-19 rates by occupation were in healthcare support (32.4 per 10,000 FTE workers) and healthcare practitioners and technical roles (26.7 per 10,000 FTE workers).
All reported changes were statistically significant at the 95% confidence level, with data for mining incorporating preliminary figures from the Mine Safety and Health Administration.
- Illegible Fine Print May Not Invalidate Arbitration Agreementon February 3, 2026 at 1:02 PM
Evangelina Yanez Fuentes applied for a job at Empire Nissan and was given an employment application packet, which included a document titled "Applicant Statement and Agreement." This document contained an arbitration provision requiring arbitration of all disputes arising from her employment. The agreement was printed in a very small, blurry font that was nearly illegible, consisting of a dense, lengthy paragraph filled with complex sentences, legal jargon, and statutory references.
Fuentes was given only five minutes to review the entire packet, was told to hurry because the drug testing facility was closing, and was informed that the documents related to her application, references, and drug testing. She was not told about the arbitration clause, given a chance to ask questions, or provided a copy after signing. The agreement also stated that any modifications must be in writing and signed by the company's president.
Later, while employed, Fuentes signed two nearly identical confidentiality agreements at Empire Nissan's request. These prohibited her from usurping business opportunities or disclosing confidential information and trade secrets. They allowed Empire Nissan to seek injunctions, legal remedies, and attorney fees in the event of a breach, and stated that they superseded all prior agreements on those topics. The copies in the record lacked the president's signature.
After working for about two and a half years, Fuentes took medical leave for cancer treatment. A year later, she requested a brief extension, but Empire Nissan terminated her employment. Fuentes then filed a lawsuit alleging wrongful discharge and related claims. Empire Nissan moved to compel arbitration based on the agreement in the application packet.
The trial court denied Empire Nissan's motion to compel arbitration. It found a high degree of procedural unconscionability due to the agreement's illegible format, complex language, and the rushed circumstances under which Fuentes signed it without a meaningful opportunity to review or negotiate.
For substantive unconscionability, the court found a low to moderate degree, citing the "fine-print terms" as indicative of unfairness (relying on precedents like OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111,128 and Davis v. TWC Dealer Group, Inc.(2019) 41 Cal.App.5th 662,674) and interpreting the confidentiality agreements as carving out claims (like unfair competition or trade secret violations) that only Empire Nissan would bring, exempting them from arbitration. The court did not address Fuentes's separate argument that no valid agreement existed due to the illegible format and presentation precluding her assent.
The Court of Appeal reversed the trial court's denial and directed it to grant the motion to compel arbitration. The Supreme Court of California, in turn, reversed the Court of Appeal's judgment and remanded the case to the trial court for further proceedings in the case of Fuentes v. Empire Nissan -S280256 (February 2026)
The Court of Appeal held that illegibility and small print were relevant only to procedural unconscionability, not substantive, disagreeing with Davis and criticizing its interpretation of "fine-print terms" in Kho as referring to font size rather than hidden unfair terms. Relying on a strong policy favoring arbitration, it interpreted the confidentiality agreements as requiring arbitration of all claims, including those under them, because any modification to the arbitration agreement needed the president's signature, which was absent. Thus, it found no substantive unconscionability and declined to address procedural unconscionability.
The Supreme Court disagreed, clarifying that a contract's format (like small, illegible print) is generally irrelevant to substantive unconscionability, which focuses on the fairness of terms, but high procedural unconscionability (present here due to oppression from the rushed process and surprise from the illegible, jargon-filled text) requires close scrutiny of terms for one-sidedness.
It found ambiguity in whether the confidentiality agreements superseded the arbitration mandate for employer-favored claims, rejecting the Court of Appeal's pro-arbitration presumption as violating equal treatment of contracts.
The Supreme Court noted an unresolved factual question about whether the president signed the confidentiality agreements, lacking a record because Empire Nissan never raised it below. It also held the Court of Appeal erred by directing arbitration without allowing the trial court to consider Fuentes's unaddressed argument that no valid contract formed due to precluded assent.
The case was remanded for the trial court to resolve these issues, potentially with further evidence and briefing, emphasizing that even low substantive unconscionability could render the agreement unenforceable given the high procedural element. Chief Justice Guerrero dissented, arguing the agreements required arbitration and that remand was unjustified without party briefing on certain issues. - DOI Proposes California FAIR Plan Legislationon February 3, 2026 at 1:01 PM
The California Insurance Commissioner and Assembly Insurance Committee Chair Lisa Calderon announced new legislation to overhaul the FAIR Plan, strengthening claims handling, expanding coverage options, and improving transparency for wildfire survivors. The Make It FAIR Act enacts key reforms identified in the California Department of Insurance’s recent Report of Examination, which found the FAIR Plan had failed to comply with 17 critical recommendations related to financial condition, corporate governance, and consumer protections.
The Department’s Report of Examination - the most comprehensive review of the FAIR Plan in decades - revealed systemic problems that have left wildfire survivors struggling with delays, denials, and inconsistent claims decisions, particularly after the 2025 Los Angeles wildfires, the largest urban wildfire disaster in state history.
The Make It FAIR Act would improve coverage and claims handling by the insurance company-run FAIR Plan. The legislation would enact reforms outlined in a comprehensive Report of Examination completed last month by the Department. The comprehensive examination evaluated the FAIR Plan’s financial conditions, corporate governance, and controls to protect policyholders across 32 areas - finding that in more than half of them, the FAIR Plan had not started or fully implemented the Department’s recommendations. The legislation would require the FAIR Plan to make significant operational and governance changes to meet Californians’ needs, while market improvements take hold, such as:
- - Implementing a more comprehensive homeowners coverage option like other insurance companies. Current FAIR Plan residential policyholders must buy a separate insurance policy — at an additional cost — to have coverage for water damage, liability if someone is injured on their property, and other standard coverages. This is unacceptable, and the FAIR Plan has been fighting Commissioner Lara in court to prevent this change since 2019.
- - Hiring more staff to manage its increasing operational needs and workload as well as expeditiously address consumer claims and complaints.
- - Expediting policyholders in returning to the regular market by improving clearinghouse programs created by the State Legislature. The Department found only some insurance companies participate in the program, undermining the Legislature’s intent in creating the programs.
- - Adopting a three-to-five-year strategic plan, like other insurance companies, to anticipate changes in the market, improve policy handling, and assist people in leaving the FAIR Plan under Commissioner Lara’s Sustainable Insurance Strategy.
- - Improving transparency by providing public access to meetings and documents of the FAIR Plan’s Governing Committee and Subcommittees, including mandating the creation of an Annual Report discussing the year in review, governance updates, premium rate information, catastrophe response plans, strategic plans, and initiatives to enhance and improve policyholder service and related metrics.
- - Prioritizing policyholders’ resilience from climate change by adopting a formal climate risk assessment, while reporting climate-related financial risks in line with how more than 85% of the national insurance markets report risks based on the standards established through the National Association of Insurance Commissioners.
- - Creating a formal capital and liquidity management plan like other insurance companies to protect from unexpected events such as major wildfires or storms.
The Make It FAIR Act builds on reforms the Insurance Commissioner advanced after the Los Angeles wildfires, including new wildfire safety grants, expanded insurance discounts, faster claim payouts for survivors, extended non-renewal protections for businesses, stronger FAIR Plan financial safeguards, and modernized insurance laws to increase transparency and accountability. - P/C Market to Have Lowest Net Combined Ratio in Decadeon February 2, 2026 at 12:24 PM
The U.S. property/casualty (P/C) insurance industry exhibited resilience in 2025 and is forecast to have its lowest Net Combined Ratio (NCR) in over a decade. This comes despite the Los Angeles wildfires in January 2025, ongoing tariffs, and other geopolitical risks entering the fray. These findings are detailed in P/C Economics and Underwriting Projections: A Forward View from the Insurance Information Institute (Triple-I) and Milliman, a collaborating partner.
“Overall, the P/C insurance industry and the broader U.S. economy remain stable,” said Michel Léonard, Ph.D., CBE, chief economist and data scientist at Triple-I. “However, despite stronger-than-expected GDP growth in the third quarter, a closer look at the data suggests the U.S. economy may be increasingly vulnerable to rising economic, political, and geopolitical uncertainty. In particular, P/C replacement costs could still see significant increases in 2026, weighing on overall P/C performance.” Léonard added that a rise in the unemployment rate toward the critical 5.0% level over the next six months could trigger an economic contraction or even a recession.
Key Highlights:
- - The collection of economic data was impacted by the U.S. government shutdown in Q4 2025, leading to data delays and gaps. Available economic data points to P/C underlying growth slowing, particularly for premium volume. Additionally, political and geopolitical risks are increasing.
- - P/C Aggregate Net Premium Growth across all P/C lines for 2025 is expected to be 5.9%, further slowing relative to 2024’s growth rate.
- - Homeowners’ 2025 Net Combined Ratio is forecast at 99.6 points, on par with 2024 despite losses from the Los Angeles fires in Q1 2025
- - Personal Auto’s 2025 Net Combined Ratio is forecast at 94.4 points, an improvement from 2024, while Net Written Premium Growth is expected to have slowed to 3.6%, the lowest level since 2020.
- - General Liability and Commercial Auto are the only major lines forecast to remain above a Net Combined Ratio of 100 points, though gradual improvements are expected for both lines in 2026–2027.
- - Workers’ Compensation continues to perform strongly, with Net Combined Ratios forecast to range from high 80s to low 90s in 2025-2027.
“We’re on track to achieve the lowest Net Combined Ratio in over a decade, thanks in part to a hurricane season that spared the U.S. and strong homeowners performance, even after the Los Angeles fires in Q1 2025,” said Patrick Schmid, Ph.D., chief insurance officer at Triple-I. “Growth in personal lines premiums remains solid, and the narrowing gap between personal and commercial lines performance points to a cautiously optimistic outlook for the industry."
Jason B. Kurtz, FCAS, MAAA, principal and consulting actuary at Milliman, added, “General Liability faces continued challenges. Our 2025 Net Combined Ratio is forecast to be similar to 2024, among the worst in over a decade. Losses are high, with Q3 direct incurred loss ratios being the highest in at least 25 years,” he said. “While conditions may improve in 2026-2027, profitability remains a hurdle. Our General Liability’s NCR expectations have risen following a challenging Q3, reflecting ongoing pressure in the segment. While some coverages are experiencing soft market conditions, aggregate premiums have been growing, but not enough to keep pace with loss trends. We anticipate additional premium growth will be needed to improve General Liability profitability.”
Workers Compensation is expected to continue delivering favorable underwriting results through 2025, supported by stable Net Written Premium trends, disciplined risk management, and favorable prior accident year development. “NCCI’s latest loss ratio trends continue to show declines,” said Donna Glenn, NCCI chief actuary. “In the current environment, modest year-to-year decreases are still expected.” Glenn noted that “while there have been a few rate increases filed in NCCI states, every state has its own story, and based on the latest data, NCCI does not anticipate any imminent reversal of current trends.” - New Section 111 Reporting Audit Process Begins in 2026on February 2, 2026 at 12:24 PM
CMS Section 111 refers to the Medicare Secondary Payer (MSP) mandatory reporting requirements under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA). It obligates Responsible Reporting Entities (RREs) - such as liability insurers, no-fault insurers, workers' compensation plans, and self-insured entities - to report information about Medicare beneficiaries who have primary coverage or receive settlements, judgments, awards, or other payments (including Total Payment Obligation to the Claimant or TPOC, and Ongoing Responsibility for Medicals or ORM). The goal is to ensure Medicare acts as a secondary payer where appropriate and to facilitate recovery of conditional payments.
This year, audits become part of CMS's enforcement mechanism for Section 111 compliance, specifically targeting Non-Group Health Plans (NGHP) like workers' compensation, liability, and no-fault insurance. These audits focus on verifying timely reporting of MSP occurrences. According to official CMS guidance, audits commenced in January 2026 and are conducted quarterly thereafter.
New Audit Process
- - Selection: CMS randomly selects 250 new MSP records per quarter from all accepted Section 111 submissions during the review period, plus records from non-Section 111 sources (e.g., self-reports from beneficiaries or providers). The sample is proportionate to the volume of Group Health Plan (GHP) and NGHP records.
- - Focus Areas: Audits check for timeliness, requiring reports within 365 days of key dates like the settlement date, funding delayed beyond TPOC date, or assumption of ORM. Non-Section 111 records are also reviewed if no matching Section 111 report exists within that window.
- - Compliance Review: RREs are notified only if potential non-compliance is identified. They can provide mitigating evidence (e.g., documentation of good-faith efforts). If non-compliance is confirmed, CMS issues an Informal Notice, followed by a Notice of Proposed Determination (with 60 days to request a hearing), and potentially a Final Determination.
- - Timeline Notes: The compliance "clock" started on October 11, 2024, for reportable events on or after that date. Enforcement via Civil Money Penalties (CMPs) applies prospectively from October 11, 2025. First notices of potential CMPs may issue as early as March 2026.
Informal Notice- Intention to Impose a Civil Money Penalty
- - First letter (Notice) issued when a noncompliant record was identified on CMS’ quarterly audit.
- - A CMP is not being assessed at this point, rather, the RRE’s noncompliant record is identified along with the associated information so that an RRE may investigate the record.
- - The process to submit mitigating information, in an attempt to explain or defend technical or administrative issues resulting in the noncompliance is outlined in this letter. Mitigating evidence must be submitted to CMS within 30 days of receipt of the Informal Notice. This is the opportunity for RREs to explain why a CMP should not be imposed.
As of the 2026 adjustment, the maximum daily penalty for NGHP reporting non-compliance is $1,512 (up from $1,428 in 2024). Late Reporting Timeframe Penalty per Day:
- - More than 1 year but less than 2 years late $357 per day.
- - More than 2 years but less than 3 years late $714 per day.
- - More than 3 years late $1,512 per day.
- - Maximum per instance: $365,000
More information about the new audit process, and compliance with Section 111 is available on the CMS website. - Lien Consolidation Orders Require Reasons & Summary of Evidenceon January 29, 2026 at 2:26 PM
Josue Barrios filed a workers' compensation claim at the Van Nuys WCAB against Nagatoshi Produce USA, Inc. and its insurer, Truck Insurance Exchange. Several medical lien claimants including Tri-County Medical Group, Inc., Tri-City Health Group, Inc., Komberg Chiropractic, and Edward Komberg, D.C. became involved as real parties in interest in the case.
Defendant Farmers Insurance Exchange (not originally part of Barrios's case but acting on behalf of multiple carriers) filed a Petition for Consolidation and Stay of Liens, alleging that the lien claimants had engaged in improper practices, such as unlawful patient referrals in violation of Labor Code sections 139.3, 139.32, and 3215, and issuing bills or reports with material misrepresentations under section 3820. Multiple other insurance carriers joined this petition, leading to multiple hearings, however no evidence was formally admitted at these hearings, and issues were not explicitly framed for decision.
On October 24, 2025, PWCJ Jeffrey Marrone issued an Order of Consolidation, Designation of Master File, and Notice of Hearing (Consolidation Order), consolidating hundreds of cases for discovery purposes under California Code of Regulations, title 8, section 10396 (Rule 10396), staying the liens, and assigning WCJ Tammy Homen as the judge for the consolidated matter.
The lien claimants petitioned to disqualify WCJ Homen, alleging bias and an undisclosed conflict because her husband, Norman Homen, is a workers' compensation attorney who had previously referred clients to the lien claimants and had social interactions with Komberg. They also sought reconsideration of the Consolidation Order, arguing it lacked factual findings, failed to show a causal connection between the consolidated cases and the allegations, and violated Rule 10396(a)(3) by not considering potential prejudice or delays. The carriers filed an answer opposing the petition, and both WCJ Homen and PWCJ Marrone submitted reports recommending denial.
In response to the disqualification petition, WCJ Homen filed a Report and Recommendation denying any conflict, stating she and her husband had no financial interest in or involvement with the lien claimants' businesses, she lacked knowledge of his referrals or clients in these cases, and mere industry interactions did not constitute bias. She noted the small size of the workers' compensation community and that she had not yet presided over any hearing or expressed opinions on the merits.
PWCJ Marrone's report on the reconsideration petition affirmed that he had considered Rule 10396's factors (e.g., common issues, complexity, prejudice, and efficiency) but provided only summary conclusions without detailed legal or factual support.
The Workers' Compensation Appeals Board issued a multifaceted decision. It denied the lien claimants' Petition for Disqualification of WCJ Homen, adopting and incorporating her report. It dismissed the Petition for Reconsideration of the Consolidation Order, treating it instead as a Petition for Removal, which it granted. As its Decision After Removal, the WCAB rescinded the Consolidation Order and returned the matter to the trial level for further proceedings consistent with its opinion in the case of Barrios v Nagatoshi Produce -SAU9000031 (January 2026).
The WCAB first addressed the disqualification petition, finding no basis under Labor Code section 5311 or Code of Civil Procedure section 641. It agreed with WCJ Homen that neither she nor her husband had a financial interest, employment relationship, or other disqualifying ties to the lien claimants. The board emphasized that assumptions about bias were insufficient without detailed facts showing enmity or an unqualified opinion on the merits, and that social or industry interactions in the small workers' compensation community could not broadly disqualify judges. The lien claimants' subjective perceptions did not meet the standard for impartiality doubts.
For the Consolidation Order, the WCAB found the order violated due process and Labor Code section 5313, which requires a summary of evidence and reasons for determinations, as supported by en banc precedent like Hamilton v. Lockheed Corporation (2001) 66 Cal.Comp.Cases 473 (requiring opinions based on admitted evidence and substantial evidence). Although PWCJ Marrone's report attempted to cure this by summarizing common issues (e.g., referral violations and misrepresentations), it lacked specific citations to law or facts connecting the hundreds of cases to the allegations, rendering meaningful appellate review impossible.
The WCAB distinguished prior cases like Kenney v. Seguoyah, Inc. 2023 Cal.Wrk.Comp. P.D. LEXIS 37, *3 (where consolidation was for a narrow, specific issue) and Harvard Surgery Center v. WCAB (Yero) (2005) 70 Cal.Comp.Cases 1354 (emphasizing the need for good cause), noting that vague references to statutes were insufficient to justify broad discovery without risking abuse.
- New QME Process Regulation Section 55.1 in Effect on April 1on January 29, 2026 at 2:26 PM
The Division of Workers’ Compensation (DWC) reminds all applicants for reappointment as a Qualified Medical Evaluator (QME) to fully satisfy the continuing education requirements of Labor Code section 55.1. by April 1, 2026.
On February 28, 2024, the Office of Administrative Law (OAL) approved DWC’s regulatory action which adopted new regulation § 55.1. That regulation enacted new educational requirements for Qualified Medical Evaluators seeking reappointment after April 1, 2026. The new criteria include:
The ability to hold on site educational programs virtually;
The requirement of 16 hours of continuing education for reappointment as a QME;
Minimum hour requirements for continuing education in specific areas as follows:
A minimum of 4 hours of instruction in disability impairment rating;
A minimum of 3 hours of instruction in medical-legal report writing;
A minimum of 2 hour of instruction in anti-bias training which meets the qualifications outlined in Section 11(h);
A minimum of 2 hours of instruction consisting of a review of workers' compensation case law;
A minimum of 1 hour of instruction in proper application of the medical-legal fee schedule or in QME adherence to regulatory clerical requirements.
The ability of a physician to earn a maximum of 2 hours continuing education credit by having their reports reviewed by an approved educational provider.
As of April 1, 2026 regulation § 55.1 will be fully effective. All applications for reappointment as a Qualified Medical Evaluator must fully satisfy the continuing education requirements of section 55.1. The full text of the regulation can be accessed using the Title 8 search.
A list of continuing education providers, some of whom are offering classes that have been accredited to meet the requirements of regulation 55.1, are listed on the DWC website.
QMEs seeking recertification are advised to make sure that the continuing education provider that they choose is in compliance with the requirements of regulation § 55.1. - Fed Court Uses Rule 23(d) to Limit Arbitration Opt Out Abuseon January 28, 2026 at 3:52 PM
The plaintiffs, Bo Avery, Phoebe Rogers, Kristy Camilleri, and Jill Unverferth, alleged that TEKsystems, a professional staffing agency that places IT consultants with business clients, had misclassified them as exempt from overtime laws, failing to pay overtime wages or provide required meal and rest breaks in violation of California labor laws. The case was filed initially in California state court but was removed to federal court by TEK. Over the ensuing months, the parties engaged in extensive discovery.
In September 2023, TEK internally approved expanding its longstanding mandatory arbitration policy - previously applied only to external consultants - to include internal employees like the recruiters.
The rollout communications criticized class actions as wasteful, inefficient, and primarily benefiting attorneys, while emphasizing arbitration's efficiency. They were sent during the holiday season, contained inconsistencies about opt-out procedures and deadlines, and suggested employees consult their own attorneys at personal expense without mentioning free access to class counsel. A separate email targeted putative class members with an opt-out form specifically for remaining in the class action.
Plaintiffs moved for class certification on October 6, 2023, with briefing completing by December 14, 2023. Just five days later, on December 19, 2023, TEK rolled out a new mutual arbitration agreement to its internal employees, including putative class members. This agreement, which covered the claims in the lawsuit, was presented via email and deemed accepted through continued employment after December 31, 2023, unless employees opted out or quit.
Of 164 recipients, only 41 opted out to stay in the class. The class was certified on February 13, 2024, with notices issuing on April 16, 2024, and an opt-out deadline of June 15, 2024. On June 10, 2024 - after plaintiffs had moved for partial summary judgment and just days before the notice period closed - TEK filed a motion to compel arbitration against class members bound by the agreement.
The federal district court in the Northern District of California, denied TEK's motion to compel arbitration. It found that TEK's communications rolling out the arbitration agreement threatened the fairness of the litigation by being misleading and omitting key information, such as the availability of free consultation with class counsel and the status of the ongoing class certification process.
The court concluded that these actions subverted Federal Rule of Civil Procedure 23's opt-out mechanism for class actions, effectively turning it into an opt-in process where inaction bound employees to arbitration and excluded them from the class. Invoking its broad authority under Rule 23(d) to manage class proceedings and ensure fairness, the district court refused to enforce the agreement. As an alternative basis, it also determined that TEK had waived its right to arbitrate by delaying the rollout for over 22 months into the litigation, engaging in a "wait-and-see" approach.
The Ninth Circuit Court of Appeals affirmed the district court's denial of the motion to compel arbitration, declining to address the waiver issue and focusing instead on the Rule 23(d) grounds in the published case of Avery v TekSystems -3:22-cv-02733-JSC (January 2026)
The panel held that district courts possess the duty and expansive authority under Rule 23(d) to oversee class actions, including the power to invalidate arbitration agreements obtained through communications that undermine the integrity of the proceedings.
The appellate court's rationale emphasized adherence to Supreme Court precedents, such as Gulf Oil Co. v. Bernard, 452 US 89 - Supreme Court 1981 and Hoffmann-La Roche Inc. v. Sperling, 493 US 165 - Supreme Court 1989 which grant district courts discretion to regulate contacts with class members and protect against abuses that could coerce or mislead them. The panel found TEK's rollout communications to be inherently threatening to fairness: they disparaged class actions repeatedly as inefficient and attorney-enriching, were timed disruptively during the holidays, included conflicting instructions on how to opt out (such as deeming acceptance via continued employment while also requesting signatures), and implied personal legal costs without disclosing class counsel's role.
These elements, combined with omissions about the lawsuit's progress, risked confusing or pressuring class members into forgoing their rights under Rule 23's opt-out framework, which presumes inclusion unless affirmatively excluded.
The court aligned its holding with similar decisions from the Fourth, Sixth, and Eleventh Circuits, rejecting TEK's argument that the Federal Arbitration Act preempted such oversight by noting that Rule 23(d) applies neutrally to all contracts and does not disfavor arbitration. Furthermore, the arbitration agreement's delegation clause - incorporating JAMS Rule 11(b), which assigns arbitrability disputes to the arbitrator - did not preclude the district court's review, as the challenge targeted the agreement's overall enforceability under procedural fairness rules rather than a specific provision.
Ultimately, the Ninth Circuit concluded that invalidating the agreement was a narrowly tailored remedy to restore the proper opt-out process, affirming the district court's decision to safeguard the class action's integrity. - Current Status of Non-Compete Clauses in Employment Contractson January 28, 2026 at 3:51 PM
The Federal Trade Commission (FTC) issued a final rule in April 2024 banning most non-compete agreements in employment contracts, with an effective date of September 4, 2024. However, in the case of Ryan LLC v. FTC (N.D. Tex., Case No. 3:24-cv-00986), U.S. District Judge Ada Brown issued a preliminary injunction in July 2024 blocking the rule's enforcement, and on August 20, 2024, she issued a final order setting aside the rule nationwide, declaring it unlawful under the Administrative Procedure Act.
The FTC appealed this decision to the U.S. Court of Appeals for the Fifth Circuit (Case No. 24-10951) on October 18, 2024. Briefing proceeded into early 2025, with the FTC filing its opening brief on January 2, 2025, and appellees (including Ryan LLC and the U.S. Chamber of Commerce) responding on February 3, 2025. The FTC then requested and received stays of the proceedings in March and July 2025, extending until September 8, 2025.
On September 5, 2025, following a change in presidential administration, the FTC filed an unopposed motion to voluntarily dismiss the appeal under Federal Rule of Appellate Procedure 42. The Fifth Circuit granted the motion and dismissed the appeal on September 8, 2025, terminating the case. The FTC also dismissed a related appeal in the Eleventh Circuit (Properties of the Villages v. FTC) around the same time, effectively acceding to the vacatur of the non-compete rule.
As of January 2026, the district court's order remains in effect, and the FTC's non-compete rule is not enforceable nationwide. The FTC has shifted focus to case-by-case enforcement against unfair non-competes under existing antitrust laws, rather than pursuing a blanket ban. There are no active appeals in this matter, though state laws on non-competes vary and may still restrict their use in certain jurisdictions.
California has one of the strictest policies in the U.S. against non-compete clauses in employment contracts, prioritizing employee mobility and open competition. Under Business and Professions Code Section 16600, any contract that restrains someone from engaging in a lawful profession, trade, or business is generally void and unenforceable. This has been the longstanding rule, but recent legislation has further reinforced and expanded these protections.
In January 2024, two new laws took effect to strengthen the ban:
- - Senate Bill 699 (now codified as Business and Professions Code Section 16600.5): Declares non-compete agreements unlawful (not just void) and prohibits employers from entering into or enforcing them, even if the agreement was signed outside California or for employment outside the state. It also creates a private right of action for employees to sue for damages, injunctive relief, and attorneys' fees.
- - Assembly Bill 1076 (now codified as Business and Professions Code Section 16600.1): Explicitly prohibits non-compete clauses and required employers to notify current and certain former employees (employed after January 1, 2022) by February 14, 2024, that any existing non-compete provisions are void. Failure to provide this notice can result in civil penalties of up to $2,500 per violation.
While non-competes are largely prohibited in the employment context, there are narrow exceptions under California law:
- - Sale of a business: Non-competes may be enforceable when tied to the sale of a business, goodwill, or ownership interest (Business and Professions Code Sections 16601 and 16602.5).
- - Dissolution of partnerships or LLCs: Limited restrictions may apply upon dissolution or dissociation (Section 16602).These exceptions are interpreted narrowly by courts, and the agreements must be reasonable in scope, duration, and geography to be upheld.
The federal FTC's attempted nationwide ban on non-competes was struck down in 2024 and abandoned in 2025, but this does not affect California's independent prohibitions, which remain in full force. Employers are advised to review and revise contracts to ensure compliance, focusing instead on alternatives like non-solicitation clauses (which may be enforceable if narrowly tailored) or enhanced trade secret protections.
For specific situations, consulting a California employment law attorney is strongly recommended, as case law continues to evolve and this is not an authoritative and complete narrative of this law. - The DWC Proposes New Regulation Restricting Depo Feeson January 27, 2026 at 3:30 PM
The Division of Workers’ Compensation (DWC) has posted proposed ranges for attorney deposition fees to its online forum where members of the public may review and comment on the proposals.
In the California workers’ compensation system, the Workers Compensation Appeals Board (WCAB), a workers’ compensation judge, or any party to the action or proceeding may request the deposition of a witness in matter before the WCAB, pursuant to Labor Code section 5710. If either the employer or the insurance carrier requests that an injured employee be deposed, that injured employee is entitled to receive, among other benefits, “a reasonable allowance for attorney’s fees” if they are represented by an attorney.
Judges have discretion when awarding the fees, which are required to be paid by employer or its insurer. Fees are currently governed by local policy established by presiding judges in each district, which serve as a guide to the parties, but individual attorneys’ fees awards are subject to litigation before WCAB judges. Pursuant to section 5710(b)(4) the Administrative Director of the Division of Workers’ Compensation (DWC) is charged with determining “the range of reasonable fees to be paid.”
The proposed regulation will establish the range of reasonable fees allowable for attorneys representing injured employees when employers or insurers request their depositions. The deposition shall not exceed the following amounts:
(1) An amount not to exceed $500 per hour for attorneys certified as Workers’ Compensation Specialists by the State Bar of California;
(2) An amount not to exceed $450 per hour for attorneys with five or more years of experience in Workers’ Compensation matters in the state of California;
(3) an amount not to exceed $400 per hour for attorneys with fewer than five years of experience in workers’ compensation matters in the state of California;
(4) an amount not to exceed $250 per hour for non-attorney representatives as identified pursuant to Labor Code section 10751.
Incremental Billing Requirements:
(1) Fees authorized under this section shall be billed on an incremental, time-based basis, reflecting actual time reasonably spent preparing the injured employee for deposition and attending the deposition.
(2) Billing increments shall not exceed one-tenth (0.1) of an hour.
(3) Minimum or flat fees are not permitted, and attorneys or representatives shall not bill for time not actually expended.
Fees shall not be sought or awarded for activities including, but not limited to:
(1) General file review;
(2) Travel time or travel expenses;
(3) Review of deposition transcripts;
(4) Administrative or clerical tasks.
The forum can be found online on the DWC forums web page under “current forums.” Comments will be accepted until 5 p.m. on February 13, 2026. - BLS Reports Employer-Reported Workplace Injuries Down 3.1%on January 27, 2026 at 3:30 PM
According to a new U.S. Bureau of Labor Statistics report, private industry employers reported 2.5 million nonfatal workplace injuries and illnesses in 2024, down 3.1 percent from 2023. This is the lowest number of employer-reported injuries and illnesses for this data series going back to 2003.
This reduction was largely driven by a 26.0% drop in illness cases, which totaled 148,000, including a significant 46.1% decrease in respiratory illnesses to 54,000 - the lowest level since 2019.
The overall incidence rate for total recordable cases (TRC) in private industry fell to 2.3 cases per 100 full-time equivalent (FTE) workers, down from 2.4 in 2023, marking the lowest rate in over two decades. Injuries accounted for the majority, with an incidence rate of 2.2 per 100 FTE workers, while the illness rate decreased to 13.9 cases per 10,000 FTE workers from 19.0 in 2023, and respiratory illnesses dropped to 5.1 per 10,000 FTE workers.
Notable declines in TRC incidence rates occurred across several sectors, including information (0.7 per 100 FTE workers, down from 1.0), health care and social assistance (3.4 per 100 FTE workers, down from 3.6), retail trade, manufacturing, and real estate and rental and leasing.
No industry sector experienced an increase in its TRC rate.
For the biennial period of 2023-2024, cases involving days away from work (DAFW) totaled 1.8 million, comprising 61.5% of days away, restricted, or transferred (DART) cases, with an annualized incidence rate of 86.6 per 10,000 FTE workers and a median of 8 days away. Days of job transfer or restriction (DJTR) cases numbered 1.1 million, or 38.5% of DART cases, with an incidence rate of 54.2 per 10,000 FTE workers and a median of 15 days.
Leading causes of DART cases included overexertion, repetitive motion, and bodily conditions (946,290 cases) and contact incidents (860,050 cases), while exposure to harmful substances and environments resulted in 224,450 cases, with 87.6% requiring at least one day away from work.
Under the updated Occupational Injury and Illness Classification System (OIICS), a new category for novel coronavirus (COVID-19) cases was introduced, showing an annualized DAFW incidence rate of 5.6 per 10,000 FTE workers in private industry for 2023-2024. The highest COVID-19 rates by occupation were in healthcare support (32.4 per 10,000 FTE workers) and healthcare practitioners and technical roles (26.7 per 10,000 FTE workers).
All reported changes were statistically significant at the 95% confidence level, with data for mining incorporating preliminary figures from the Mine Safety and Health Administration.