And yet, when it came time to file a brief supporting the executive order retaliating against lawyers, you were too afraid to sign your own name.

That’s exactly what happened last Friday. Bloomberg reports that the firms and in-house counsel who filed amicus briefs asking the D.C. Circuit to affirm the lower court rulings invalidating retaliatory executive orders against fourl bigaw firms did so anonymously. Let that sink in for a moment. These are supposed to be the heavyweights of the legal profession, who have the biggest platforms, the deepest pockets, and the most job security. And they couldn’t muster the courage to put their names on a public court filing.

Now contrast that with our solos and smalls. We’re built different.  Eight hundred and thirteen solo and small firm lawyers proudly signed their names to this amicus brief we filed opposing the executive orders. No anonymity. No hiding. Just lawyers standing up and saying, “This is what I believe.”

The money and prestige of high-level legal positions are enviable, but they come at a cost. The freedom to sign your name whenever you want? That’s priceless.

Abstract: Management service organizations (MSOs) — private-equity-backed companies that buy a law firm’s operational infrastructure and manage it back under long-term contract — are being pitched as a novel workaround to the prohibition on nonlawyer ownership of law firms. They’re not. The legal profession has already experimented with MSO-like dual-entity structures, from the benign failures of Clearspire and Atrium to the devastating foreclosure mills of the 2000s, where the separation of business operations from legal practice led to robo-signed documents, fabricated affidavits, and mass harm to homeowners. Today, only one ethics opinion — Texas Ethics Opinion 706 — directly addresses MSOs, and it leaves critical questions about long-term governance unanswered. This article examines how MSOs operate, how they differ from PEOs and other outsourcing arrangements solos already use, what the ethics rules actually say, and why solos and small firms may be better served by the alternatives that have always been available to them.

For a profession powered by precedent, lawyers have remarkably short memories when it comes to the past. Today, managed service organizations (MSOs) — private-equity-backed companies that purchase a law firm’s entire operational infrastructure and then manage it under long-term contract — are regarded as some new kind of end run around the prohibition on outside law firm ownership. But the reality is that legal has already experimented with MSO-type arrangements in the past with disappointing and in the case of foreclosure mills, devastating results.  

Still, MSO deals are gaining traction in the legal market and it’s only a matter of time before these models reach solos and small firms. So it’s worth understanding now what these arrangements actually involve, and whether the alternatives to outside ownership and exit strategy that have always been available might get you where you want to go without taking the profession down with you

So let’s take a step back and look at how an MSO actually operates. A private-equity-backed company acquires all of a law firm’s non-legal operations — technology, HR, payroll, marketing, facilities, client intake, data infrastructure — and then manages those functions back to the firm under a long-term management services agreement.  The  lawyers keep practicing law and the MSO runs everything else. 

But an MSO differs from a passive vendor like a professional employer organization (PEO) that manages HR or an IT company that operates your tech.  MSOs are intricately involved with day to day operations that can impact clients – like client-intake or imposing timelines for resolving litigation.  And because law firm owners often own a piece of the MSO which is the asset with the real resale value, there’s an incentive to follow the MSO’s strategy at potential detriment to law firm clients.  As one recent article by Lev Bryedo describes it, “the MSO hires the practice’s office manager, then its billing staff, then its scheduling coordinator, then implements intake systems that channel patients based on revenue optimization. Each individual step may be defensible as a business function. Cumulatively, they can transform the MSO from a service provider into a de facto practice manager.” And because law firm owners often own a piece of the MSO — which is the asset with the real resale value — there’s an incentive to follow the MSO’s strategy at potential detriment to law firm clients. 

The legal profession has already dealt with MSO-like structures.  As Bob Ambrogi reported several years back, some have been benign failures — ambitious experiments that simply didn’t work out.  For example, a venture called Clearspire launched in 2010 with the idea of splitting a law practice into two entities: one to practice law, the other to handle technology and operations. It shut down four years later. Then in 2017, Justin Kan, who’d previously sold Twitch to Amazon for $970 million,  launched Atrium with $75 million in venture capital and the same basic concept: a law firm on one side, a technology services company called Atrium LTS on the other, handling all operations, marketing, and workflow software. By January 2020, most of the lawyers had been let go. In both cases, no clients suffered. These were just business models that couldn’t sustain themselves. 

But other experiments with this kind of structure had far worse consequences.  During the foreclosure crisis, high-volume mills like David Stern’s in Florida and Steven Baum’s in New York sold their document processing and operational infrastructure to outside entities while the lawyers kept their licenses and stayed on as clients of the very companies they’d sold to.  Once the business side was running the show, pressure to increase case volume and profit led to robo-signed documents, fabricated affidavits, and impossible caseloads that burned through lawyers and left thousands homeless.   The scandal could have continued for years were it not for  heroic solo and small firm lawyerswho stumbled across the massive abuses while doing their job of representing their clients.

Some chalk up the foreclosure crisis example to bad actors. Not so.  It’s the unavoidable by-product of pressure to generate returns combined with technology built for efficiency.  AI raises the stakes.  

As I said earlier, right now high-profit operations like big PI and mass torts hold the most appeal for MSOs. But they may soon move down the food chain and consider a grab for solo and small firm markets. And if they do, solos and small firms need to understand the ethics landscape.

To date, only Texas Ethics Opinion 706 (February 2025) directly addresses MSOs by name It draws two bright lines. First, the opinion holds that paying an MSO a percentage of your firm’s revenues constitutes impermissible fee-splitting with a nonlawyer. The fee has to be flat, cost-plus, or otherwise untethered from what you earn from clients. Second, lawyers can own equity in an MSO – but only if the MSO doesn’t practice law, the investment doesn’t impair professional judgment, and any referrals between the firm and the MSO comply with conflict-of-interest rules. 

For everything else, we’re working from analogy. As this Holland & Knight post summarizes, state bars have been approving PEO arrangements for decades — New Hampshire in 1989, Michigan, North Carolina, Connecticut, Texas, Colorado, Ohio, New York, all following with essentially the same conditions: the law firm stays in control, no fee-splitting, protect client confidences, supervise nonlawyer staff. DC Bar Ethics Opinion 304 is a good example. It approved a firm outsourcing all its HR functions to an employee management company but only because the firm retained “full management and supervisory authority” and the management company had “no say in directing lawyers or legal assistants what duties to perform.” That’s a PEO staying in its lane. By contrast, an MSO that controls your intake, your case processing times, your technology, your marketing, and your staffing is a fundamentally different animal that no regulators have approved to date..

            To be honest, I’m not opposed to non-lawyer ownership of law firms. Arizona ripped off the band-aid by abolishing its version of Model Rule 5.4, with mixed results for consumers.  At least it’s clear to consumers where a law firm stands. it’s either owned by lawyers or it’s not.  MSOs are too clever by half: they incubate a blurred netherland, allowing a firm to hold itself out as owned by attorneys when VC is calling the shots.  

            What’s more, it’s not clear that MSOs offer solos and small firms much they can’t already get on their own. Many of the operational services an MSO would provide — technology, billing, marketing, intake systems — can now be handled in-house with AI tools and off-the-shelf software at a fraction of the cost and with none of the strings. And if the appeal of an MSO is really about an exit strategy, a solo or small firm would be better off building up the practice for an outright sale than handing over its operational infrastructure at a discount under a long-term management services agreement.

Biodiversity degradation is an existential crisis affecting planetary and human health, but the 1973 Endangered Species Act, as it has been administered, falls short. It is widely accepted that in the five decades the law has been in effect, populations of mammals, birds, amphibians, and fish have dropped a shocking 68 percent.

For those engaged in business in which real estate is an asset, last week’s announcement of four proposed ESA rules is more than administrative housekeeping. It represents a meaningful turn toward restoring the predictability, efficacy, and statutory fidelity that the regulated community relies on to make informed decisions about land and capital under a federal law up to the challenge.

The proposals would roll back Biden era ESA regulations, widely criticized for expanding federal reach, creating unnecessary complexity, and drifting away from the statute’s text, all despite more than five decades of ESA implementation history. These new rules implement Executive Orders 14154 (“Unleashing American Energy”) and 14219 (“Department of Government Efficiency”), as well as Secretary’s Order 3418, which collectively direct agencies to remove regulatory barriers that impede responsible resource development and economic growth while maintaining the conservation mission Congress intended.

As Secretary of the Interior Doug Burgum put it, the administration is “restoring the Endangered Species Act to its original intent, protecting species through clear, consistent and lawful standards that also respect the livelihoods of Americans who depend on our land and resources.”

What the Four Proposed Rules Would Do

1. Listing and Critical Habitat (50 CFR part 424)
This rule would return the listing process to the 2019 regulatory text. Most significantly, it would once again allow transparent consideration of economic impact information that does not dictate the listing decision but helps the public understand its implications. It also restores clarity to the “foreseeable future” standard and reinstates the longstanding two-step analysis for designating unoccupied habitat. For developers of real estate projects managing timelines and financing, a return to well understood definitions is not trivial.

2. Interagency Cooperation (50 CFR part 402)
Section 7 consultation has long been the chokepoint where project timelines can stall. The agencies propose to restore the 2019 definitions of “effects of the action” and “environmental baseline,” removing the 2024 “offset” provisions that never fit comfortably within the statute. These revisions directly respond to the Supreme Court’s landmark Loper Bright decision, which ended Chevron deference and reinforced that agencies must adhere to the ESA as written. Clarity in consultation is clarity in project management.

3. Threatened Species Protections (section 4(d))
FWS proposes to eliminate the “blanket 4(d) rule,” replacing it with species specific rules for threatened species. This aligns FWS with NMFS’s longstanding approach and reflects the best reading of the statute under Loper Bright. Importantly for real estate interests, this ensures that restrictions are narrowly tailored, avoiding one size fits all prohibitions that needlessly burden otherwise routine activities.

4. Critical Habitat Exclusions (section 4(b)(2))
Finally, FWS proposes to reinstate its 2020 critical habitat exclusion rule governing how economic, national security, and other impacts are considered when evaluating whether to exclude areas from critical habitat. This process had been disrupted by the 2024 rules. The reinstated framework promises transparency and predictability while retaining the agency’s authority to protect species from extinction.

Director Brian Nesvik of FWS emphasized that these actions “restore clarity and predictability” and keep the focus on “recovery outcomes, not paperwork.” That message resonates strongly across industries that depend on stable regulatory expectations.

What These Changes Mean on the Ground

While none of these rules individually upends the ESA landscape, their collective impact is significant. Pending lawsuits challenging the 2024 regulations may become moot or need to be amended, and new challenges are likely. Of particular note: these proposed rules do not address the Service’s recent proposal to rescind the ESA’s definition of “harm,” a high stakes issue to watch closely.

Because all four proposed rules are prospective, current ESA determinations remain valid. Existing consultations, biological opinions, and critical habitat designations continue to control ongoing operations. But regulated entities should anticipate that threatened species protections may shift once species specific 4(d) rules come online, and consultation procedures for new projects will almost certainly change.

In short, the rules promise more clarity, but also more change, both of which will better respond to biodiversity degradation.

Of note, these changes will not impact state laws, like the Maryland Nongame and Endangered Species Act where the state has its own list of protected species not on the federal list, including legislatively (i.e., not through any scientific or data driven process) protecting species not federally listed, like the eastern small footed bat (after the U.S. Fish and Wildlife Service “found that listing was not warranted” because the culprit in its decline was not humans but a fungus), further expanding the state’s regulatory reach and imposing significant economic burdens on landowners in the State with no real benefit to planetary or human health.

A Look Back and Forward

Veterans of ESA practice may recall that the first federal endangered species list included a handful of charismatic megafauna, including the grizzly bear. The ESA’s scope has since expanded dramatically, even as biodiversity loss accelerates. Critics argue the statute has failed to meet the scale of today’s ecological challenges. Supporters emphasize that the law remains one of the strongest conservation tools ever enacted.

Regardless, the regulated community functions best under clear, consistent rules. These proposals aim to deliver just that.

The agencies are accepting comments through December 21, 2025. Stakeholders in real estate, construction, infrastructure, and energy development would be wise to weigh in. When it comes to ESA regulation, clarity is not merely good governance; it is a competitive advantage that is also good for biodiversity degradation.

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Join us for the next in our webinar series at the Intersection of Business, Science, and Law, “Mandatory GHG Disclosures in Real Estate Contracts” on Tues, Dec 16 at 9 am. The webinar is complimentary, but you must register here

At the same time, technology and AI are beginning to transform what compliance looks like. Our firm has been developing an AI-powered compliance platform designed specifically for California wage-and-hour rules, and early feedback from the first companies using it has been extremely positive. More on that below.

For now, here are the five compliance priorities every employer should be focused on as we head into the new year:

1. PAGA Reform Only Helps Employers Who Can Prove Compliance

The 2024 PAGA reform allows employers to dramatically reduce potential penalties—down to 15% of what plaintiffs could otherwise seek. But this benefit is not automatic.

To qualify, employers must show they took meaningful “reasonable steps,” including:

• Regular payroll and timekeeping audits
• Updated policies and employee handbooks
• Supervisor training
• Prompt corrective action

Documentation is now everything.
If it’s not documented, it didn’t happen.

2. PAGA Filings Are Still at Record Levels

Many assumed PAGA lawsuits would drop after the reform. They didn’t.

In fact:

• 2024 saw the highest number of PAGA filings in history
• 2025 is tracking at nearly identical levels
• A handful of plaintiff firms now file over 25% of all PAGA cases statewide

High-volume plaintiff firms are moving quickly, and state enforcement remains aggressive.
Reform changed the rules—but it did not reduce the risk.

3. Routine Payroll & Timekeeping Audits Are Your Strongest Protection

Meal and rest periods, accurate timekeeping, paystub formatting, overtime calculations, split-shift rules, and off-the-clock issues continue to drive the majority of wage-and-hour claims.

The best defense entering 2026 is a recurring audit process, ideally quarterly. These audits should review:

• Meal and rest break compliance
• Paystub formatting (Labor Code § 226)
• Overtime and double-time calculations
• Local and state minimum wage updates
• Timecard edits, patterns, and approvals

When a PAGA notice arrives proving compliance will be critical.

If you don’t have that documentation, you lose access to the 15% penalty cap.

We’ve created a simple model employers can use to set up their own audit process—a 5-step, 30-minute payroll audit. Download it here.

4. Supervisor Training Is Now Essential—Not Optional

To qualify for reduced PAGA penalties, employers must show that supervisors were trained on wage-and-hour compliance.

Effective training must cover:

• Scheduling legally compliant meal and rest periods
• How to handle late, short, or missed breaks
• Preventing off-the-clock work
• Overtime rules
• Documentation and communication requirements

Employers should maintain records of:

• Attendance
• Training length
• Topics covered
• Learning management system completions or signed acknowledgments

A well-trained supervisor can prevent more violations than any policy manual.

5. AI Will Transform Compliance in 2026—and We’re Building the Tools

One of the most important developments heading into 2026 is the arrival of AI-driven wage-and-hour compliance software.

Our firm has partnered with a developer to build a platform specifically for California employers that can:

• Analyze thousands of time records in minutes
• Detect missed, short, or late breaks
• Identify missing premiums
• Flag potential violations or patterns
• Run automated payroll audits
• Produce summaries employers can use as evidence of “reasonable steps”

Several employers are already using early versions of the software, and the feedback has been extremely encouraging. Many report that it provides compliance visibility they could never realistically achieve on their own.

If you’d like to join the waitlist for early access, sign up here.

Final Thoughts for 2026

California’s regulatory environment isn’t getting simpler—but employers have more tools than ever to protect themselves. Heading into 2026, success depends on:

• Staying current on wage-and-hour requirements
• Building consistent systems—not one-off fixes
• Documenting every compliance effort
• Training supervisors thoroughly
• Leveraging technology and AI to stay ahead of violations

If you’d like help conducting a privileged wage-and-hour audit, strengthening your compliance systems, or training your managers before the new year, my team and I are here to support you.

Many employees say AI improves efficiency, idea generation, and work quality. McKinsey & Company+1

But this increased adoption comes with risks. Independent surveys of workers show many admit to inappropriate AI use, including uploading sensitive company data to public AI tools, using AI when it is not allowed, or failing to check the accuracy of AI-generated work. Fast Company+1

Why Banning AI Use Is a Bad Idea

With so many employees already using AI on their phones or home computers, a blanket ban is unlikely to work. Banning AI tends to drive use underground. That hiding can erode trust, lead to undisclosed mistakes, and harm company culture.

Even with a ban, the risks remain: Privacy breaches, improper use, and unrecorded AI-assisted work. Banning only reduces transparency.

A Better Approach: Train Your Workforce

Many of the problems associated with AI use stem from lack of understanding. The better path is to treat AI as a workplace tool and teach employees how to use it responsibly:

• Train them on how AI works, including its limitations.
  
• Emphasize verification: AI-generated content must be checked before use.
  
• Teach confidentiality and data-handling best practices.
  
• Provide examples of acceptable vs prohibited use.
  

Several workforce-AI studies highlight that adoption of AI tools tends to be far safer and more effective when paired with training, guidance, and human oversight. McKinsey & Company+1

If internal resources are limited, employers can rely on external training programs or vendor-provided onboarding.

Why You Need a Clear AI Policy

A thoughtful AI policy should cover:

• Confidentiality and data protection.
  
• Disclosure requirements for AI-generated work.
  
• Verification of AI outputs.
  
• Human accountability (final decisions remain with people.)
  
• Intellectual property and attribution guidelines.
  
• Prohibitions against certain risky AI uses (e.g. replicating someone else’s likeness or voice).
  
• Clear consequences and reporting mechanisms.
  

There is no universal AI policy template. What works for one organisation may not suit another.

Encourage Ongoing Learning and Upskilling

Technology evolves quickly. Many experts find that a worker’s “skills half-life” is shrinking; what they know today may need a refresh in just a few years.

Employers should consider offering regular AI training sessions, time for self-directed learning, or even modest budgets for continuous education. Investing in people ensures that AI remains a tool, not a risk.

Final Takeaway

AI is already transforming workplaces. A ban may seem like an easy fix, but it rarely works in practice. A better strategy is to build trust, offer training, set clear policies, and encourage responsible use.

With the right approach, AI can boost productivity, support innovation, and help employees do better work, without compromising compliance or trust.

If your organisation needs help developing an AI use policy or staff training, feel free to reach out to our team for support.

Expanding Greenwashing Litigation Landscape

At the same time, the cast of plaintiffs bringing these matters has widened, joined by increasingly sophisticated allegations. Shifting government enforcement priorities have only emboldened activists and private consumers to make claims and initiate litigation.

Greenwashing is no longer a theoretical compliance concern. It is a real and material area of risk for which there is little insurance, which American businesses, including sectors once assumed to be peripheral to environmental claims. The food production sector is one such example.

High-Profile Settlements: Tyson Foods and JBS USA

Two of the largest players in U.S. beef production, Tyson Foods and JBS USA, recently entered into high-profile settlements over alleged greenwashing. Together, these companies produce more than 50% of the beef consumed in the United States. Their settlements are a cautionary tale for every business making environmental assertions about products or operations. If they can come after the cows (.. cows belch methane, but evidently it is not an anthropogenic thing), your business could be next with a bullseye on its back.

Tyson Foods resolved litigation brought by the Environmental Working Group in a settlement agreement, agreeing to cease claiming that it aims to achieve “net zero” emissions by 2050. Tyson also decided to halt allegedly misleading marketing for its Brazen Beef line. Although the company cited a 10% reduction in greenhouse gas emissions during production relative to conventional beef, the 2024 lawsuit argued Tyson conveyed a misleading impression that its broader portfolio was “climate smart,” and most aggressively in what some have characterized as weaponizing environmental protection, that Tyson lacked a rigorous enough plan that could achieve its net zero goals, that was the reason the company was forced into a settlement. In a year when Tyson lost more than $460 million on its beef business and closed its Lexington, Nebraska, plant, one of its four major beef processing plants, in part in response to “legal settlements.”

JBS USA faced similar claims. The New York Attorney General filed complaint incredibly avers, “Even if it had developed a plan to be ‘Net Zero by 2040,’ the JBS Group could not feasibly meet its pledge because there are no proven agricultural practices to reduce its greenhouse gas emissions to net zero at the JBS Group’s current scale, and offsetting those emissions would be a costly undertaking of an unprecedented degree.” Many criticized this case as not based in science but a political attack, as we blogged in New York is Coming for Your Cheeseburger with Greenwashing Case. This case concluded with JBS entering into an Assurance of Discontinuance and agreeing to pay $1.1 million to settle allegations that it misled the public about its climate commitments.

Navigating Compliance and Mitigating Risk

While lacking full statistical rigor, we have seen a surge at our law firm in inquiries seeking counsel in defending greenwashing allegations. We have posted more than a dozen blogs on the subject, including recently, Reverse Greenwashing: The Battle Over ExxonMobil’s Recycling, and Greenwashing? Court Says Coca-Cola’s Aspirational Statements May Mislead Consumers.  

Just last week, the US Supreme Court let stand a Ninth Circuit Court of Appeals ruling that Amazon is not liable for third party greenwashing claims, upholding its protection under Section 230 of the Communications Decency Act. The case was brought by Planet Green Cartridges, a printer cartridge recycler, which alleged that Amazon profited from other sellers falsely advertising their products as recycled.

So where should a business begin?

While nearly a dinosaur in regulatory terms, the best foundation remains the Federal Trade Commission’s “Green Guides,” found at 16 C.F.R. § 260. These Guides represent the FTC’s current views on environmental claims, even if “current” is a bit generous, with the last update in 1998. Still, they offer practical examples of what the FTC considers impermissible or misleading environmental marketing. The existing Guides remain the most authoritative baseline for evaluating environmental claims.

Key Takeaways for Businesses

The lesson from 2025 is unmistakable: environmental statements must be precise, substantiated, and contextualized. Truth is not an absolute defense. Aspirational statements about future climate goals are no longer immune from challenge. Claims about renewable energy, carbon, climate, sustainability, recyclability, or renewable content must be anchored in verifiable, defensible evidence.

As greenwashing litigation continues to evolve and expand, companies must remain vigilant. By consulting knowledgeable counsel at the outset, before a product launch, a website refresh, or an annual report, companies can safeguard their reputation, avoid costly disputes, and help foster a marketplace where environmental claims are to be believed. If environmental zealots can come for the cows, they are similarly capable of targeting your business.

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Join us for the next in our webinar series at the Intersection of Business, Science, and Law, “Mandatory GHG Disclosures in Real Estate Contracts” on Tues, Dec 16 at 9 am. The webinar is complimentary, but you must register here.

1. Holiday Time Off Is Not Required Under California Law

California employers are not legally required to give employees time off for holidays, unless the request relates to a sincerely held religious belief (covered below). As the DLSE explains:

“Hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week. California law does not require employers to provide paid holidays, close their business on holidays, or give employees time off for specific holidays.”

That said, consistent application of company policies is essential, especially in 24/7 operations like restaurants, hospitality, and healthcare.

2. No Requirement for Paid Holidays or Premium Pay for Holiday Work

Employers do not need to pay employees for holidays they do not work, nor is extra pay required for hours worked on a holiday. While employers may voluntarily offer “holiday pay” or premium pay, these benefits must be clearly defined in handbooks or written policies.

Legislative attempts such as the “Double Pay on the Holiday Act of 2016” have occasionally surfaced, but none have passed. Still, given California’s active legislative climate, employers should monitor for future proposals impacting holiday pay.

3. Religious Holiday Observances Require Reasonable Accommodation

Employers must provide reasonable accommodations to employees who cannot work on certain holidays due to religious observances. This may include schedule adjustments, shift swaps, or allowing use of accrued time off. As with all accommodation issues, the analysis is fact-specific and requires an individualized assessment.

For industries that regularly operate on holidays—restaurants, retail, hospitality—employers should clearly communicate scheduling expectations in advance and ensure managers understand the accommodation process.

4. Paid Holiday Benefits Do Not Accrue Like Vacation

If an employer offers paid holidays, employees do not accrue this benefit like vacation, and unused holiday pay does not need to be paid out at separation. Employers should be explicit that holiday pay is contingent on being employed on the holiday itself.

Many employers also implement eligibility rules—such as requiring employees to work their scheduled shift immediately before and after the holiday. These rules must be applied consistently and should be clearly stated to avoid claims of unfair treatment.

5. Payroll Timing May Shift When Holidays Fall on Payday

If a holiday falls on a regular payday and the business is closed, the employer may process wages on the next business day. Employers should confirm that payroll schedules comply with the DLSE’s requirements and review the list of holidays recognized under California Government Code Section 6700, including:

• New Year’s Day
• Martin Luther King Jr. Day
• Memorial Day
• Independence Day
• Veterans Day
• Christmas Day

Additional holidays—such as Admission Day (September 9) and Native American Day (fourth Friday in September)—are also included in the Code.

Employers should review their payroll vendor’s holiday schedule now to avoid surprises and ensure timely, compliant wage payments.

Wishing you a productive and successful holiday season! With clear policies and proactive communication, employers can reduce risk, maintain compliance, and support employees during one of the busiest times of the year.

From January 1, 2026, employers with 25 or more employees must say in any publicly advertised job posting if AI is used to screen, assess, or select applicants. You must also include the same note in any associated application form. 

This sits beside other new posting rules, such as pay range disclosure and the prohibition on requiring “Canadian experience” in job postings. 

Who is covered 

• Employers in Ontario with 25 or more employees. 
• Publicly advertised job postings and related application forms. 

What must be disclosed 

A clear statement that your hiring process uses AI at any stage to screen, assess, or select candidates. Ontario has adopted a broad definition of AI, and the obligation is disclosure, not a full technical report. Expect further guidance as the effective date nears. 

Sample disclosure statements you can copy 

Pick one and tailor it to the tools you actually use. 

1. “We use AI-enabled tools to sort applications based on job-related criteria. A human decides who moves forward.” 
2. “Our hiring process includes AI screening for keywords and minimum qualifications. Recruiters review all results.” 
3. “Video interviews may be scored with AI. Trained staff review the scores before any decision is made.” 

Tip: Keep it short, accurate, and visible on both the job ad and the application page. HR teams should be ready to answer candidate questions about AI use. 

Your 6-step compliance checklist 

1. Inventory your tools. Note any software that ranks, filters, or scores candidates. 
2. Decide what the tool does. Screening, assessing, selecting—or all three. Write it down in plain English. 
3. Add disclosure lines to every posting and application form in advance of the deadline, ideally by December 2025. 
4. Post pay ranges and remove “Canadian experience” requirements to prepare for the full 2026 posting rules package. 
5. Train your team on how to answer candidate questions about AI. 
6. Keep a human in the loop. Use AI to assist, not replace, decision makers. 

FAQs 

• Do we need to name the vendor or publish model details?
  • No. The Act requires disclosure of AI use, not technical specs. Keep it clear and accurate. 
• Does this apply to generic “Help Wanted” signs?
  • No. The duty targets publicly advertised postings, not generic notices. 
• Is there guidance on exact wording?
  • Not yet. Legal commentators expect more direction before 2026, so monitor updates. 

Need a quick policy refresh before year-end planning? SpringLaw can review your hiring tools, draft compliant disclosure language, and train your team. 
 

Tehran Nears “Water Bankruptcy”

The world has watched Tehran, a metropolis of roughly 10 million people, begin to ration potable water as decades of mismanagement collide with the worst drought Iran has seen in sixty years. Reservoirs that once held the capital’s lifeblood are now running on empty. Rainfall has fallen to historic lows.

Iranian President Masud Pezeshkian recently warned that continued drought could force the evacuation of parts of Tehran, even raising the once unthinkable prospect of moving the nation’s capital. It is difficult to overstate the gravity of such a statement, yet experts say even that does not capture the full extent of the crisis.

Kaveh Madani, director of the United Nations University Institute for Water, Environment, and Health, and former deputy head of Iran’s Department of Environment, has been unsparing:

“The level of their warnings is too low compared to the reality on the ground.”

Madani emphasizes what many in the post Covid era understand too well: governments hesitate to issue the direst warnings for fear of inciting panic, even when the situation demands nothing less.

What Does Water Bankruptcy Mean?

“Water bankruptcy” is not a metaphor. It is a technical condition in which water consumption exceeds water supply, and the deficit becomes irreversible.

This condition is nearly always driven by bad policy decisions,particularly efforts to artificially boost agricultural output in arid regions. Iran’s push for food self sufficiency, understandable in light of decades of sanctions, has resulted in the nation producing 85% of its own food. But the cost has been aquifers and reservoirs drained far beyond sustainable levels.

Today:

• Tehran’s five main reservoirs hold only 11% of capacity.
• In Mashhad, a city of 4 million, reservoirs are below 3%.
• Nineteen major dams nationwide have run completely dry.
• More than 20 others are below 5% of capacity.

These numbers are staggering. And yet a concrete, nation scale solution has yet to be presented. Officials continue to downplay the crisis, wary of provoking public unrest or admitting mismanagement.

But water shortages have already repeatedly sparked protests across Iran, including in Khuzestan Province in 2021, where the demonstrations led to fatal crackdowns. And as trust in government declines, public willingness to cooperate with conservation measures, a critical component of emergency response, declines along with it.

Beyond Tehran: The Kabul Emergency That the World Barely Sees

While Tehran dominates global coverage, Kabul, Afghanistan, may be facing an even more imminent water collapse, but the world barely hears a whisper, in part because the Taliban government provides little transparency and there is no free press.

The facts that do sneak out are alarming:

• Kabul’s aquifer levels have fallen up to 30 meters in a decade.
• Annual groundwater extraction exceeds natural recharge by 44 million cubic meters.
• Nearly half of all boreholes are already dry.
• As many as 120,000 private borewells are draining the aquifer.
• Up to 80% of groundwater is contaminated with sewage and chemical waste.
• Schools and healthcare facilities are closing for a lack of clean water.
• Water prices have soared beyond affordability for many families.

If current trends continue, Kabul may become the first modern city of its size to run out of water entirely. This is not theoretical. It is happening now.

An International Crisis: Water Bankruptcy Goes Global

Iran and Afghanistan are not outliers; they are warnings.

The World Resources Institute has identified 17 countries as facing “extremely high water stress,” defined as consuming more than 80% of available water annually. India, though 13th on the list, has a population more than three times the size of the other 16 countries combined. Cities like Chennai already teeter on the brink.

A quarter of the world’s population lives a few dry weeks away from disaster.

Water scarcity does not respect political boundaries. Where it emerges, it destabilizes:

• Food production
• Energy generation
• Public health
• Regional security
• Mass migration to cities and other countries

A drought was the tipping point with the resultant civil unrest in 2011 that destabilized the Syrian government. As we see in Iran, it can even threaten the physical viability of national capitals  cities.

What About the United States?

While the U.S. is not yet Tehran or Kabul, it is a mistake, an increasingly dangerous one, to assume American water infrastructure is immune.

Cities across the United States face profound water challenges:

• San Antonio, reliant on the porous fractured limestone Edwards Aquifer vulnerable to contamination and fluctuating water levels
• Phoenix and Las Vegas, dependent on the drought impacted rapidly declining Colorado River, including diminishing Lake Meade
• Miami, where saltwater intrusion threatens increasingly overtaxed groundwater supplies
• Communities throughout the Great Plains are watching the Ogallala Aquifer drop to levels that will permanently end irrigated agriculture in some regions
• Baltimore, with contamination in infrastructure, includes disinfection byproducts and E. coli, and water conservation challenges due to low legacy reservoir levels

The U.S. does Not face water bankruptcy today, but it is accruing debt.

Conclusion: A Call to Refocus Environmental Priority

This week, many environmental advocates are gathered in Belém, Brazil, for COP30, where climate change takes center stage. But the unfolding crises in Tehran, Kabul, Chennai, and even parts of the United States demand a recalibration of global environmental priorities.

Access to clean, safe drinking water is not a distant threat. It is a present tense emergency affecting billions.

Matters of climate remain critical, but it is a long arc. Potable water is the immediate curve at our feet.

Water is the foundational resource on which human survival, economic stability, and geopolitical security rest. We can transition energy systems over decades. We cannot transition away from water.

The era of water bankruptcy has arrived. The question is whether policymakers and businesses will recognize the urgency and act before more cities find themselves where Tehran stands today.

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Join us for the next in our webinar series at the Intersection of Business, Science, and Law, “Mandatory GHG Disclosures in Real Estate Contracts” on Tues, Dec 16 at 9 am. The webinar is complimentary, but you must register here.

1. Iloff v. Bridgeville Properties, Inc. – California Supreme Court (2025) – “Good Faith” Requires Real Effort

This case involved a handyman who performed maintenance work on a rural property owned by Bridgeville Properties. Under an informal arrangement, the worker lived rent-free in a house on the property but received no wages, no time records, and no benefits.

When he was terminated, he filed claims with the Labor Commissioner. Both the Commissioner and the trial court held he was an employee, not an independent contractor. The trial court denied liquidated damages, finding the owners acted in “good faith.”

The Supreme Court reversed, clarifying that:

• A good-faith defense requires evidence the employer actually researched or attempted to comply with minimum wage obligations.
• “Good intentions” or “ignorance of the law” are not enough.
• Employers appealing Labor Commissioner decisions must expect employees to raise Paid Sick Leave claims as part of the appeal—even if the Commissioner declined to address them.

More Facts:

• The employer never sought legal advice or reviewed wage requirements.
• There was no written agreement regarding housing-for-work exchanges.
• The Court found the arrangement “informal, undocumented, and unlawful.”

Employer Lesson:
You must be able to prove compliance efforts—policies, legal consultation, documentation. Good faith now requires a paper trail.

2. Kruitbosch v. Bakersfield Recovery Services – Cal. Ct. App., 5th Dist. (Sept. 2025) – HR’s Response Can Create Liability

This case underscores how an employer’s response to a harassment complaint can itself create a hostile work environment under FEHA—even when the underlying conduct occurs off-duty.

The plaintiff, a male employee, was harassed off-duty by a female coworker, Sanders, who allegedly sent him nude photos, propositioned him for sex, offered him drugs, and even showed up at his home uninvited.

Critical Additional Facts:

• The plaintiff immediately reported Sanders’s behavior to acting program director Stephanie Carroll.
• HR representative Kimberly Giles was also informed that Sanders had sent nude photos, made sexual propositions, offered drugs, and appeared at the plaintiff’s residence.
• Carroll told the plaintiff there was “not much she could do” about Sanders’s conduct.
• That same day, Giles posted a social media video of whining dogs with the caption: “‘This is a work day at thr [sic] office ... lmbo.’” This was widely understood by staff as mocking the plaintiff’s complaint.
• Later that week, Giles sarcastically told the plaintiff: “‘I hope you don’t get no more pictures.’”
• At no point did Carroll, Giles, or Bakersfield Recovery Services (BRS) attempt to separate the plaintiff from Sanders, investigate, or take corrective action.
• No discipline was issued to Sanders.

The Court Held:

• The employer’s mockery, dismissiveness, and inaction—not the off-duty conduct—created a hostile work environment.
• FEHA liability arises when the employer’s response is itself harassing, belittling, or indifferent to an employee’s safety.
• Other claims (retaliation, constructive discharge) were dismissed only because there was no adverse employment action.

Employer Lesson:

An employer doesn’t get to hide behind the fact that harassment occurred off-duty. What also matters is how management responds when concerns are raised. Mockery, sarcasm, or inaction can transform an external problem into an internal FEHA violation.

3. Carranza v. City of Los Angeles –California Court of Appeal (2025) – Digital Harassment, Employer Inaction, and a Difficult Judgment Call

This case involved a LAPD Captain, one of the highest-ranking female officers in the department. She learned that a topless photo purporting to be her (but it was not) was circulating among officers on duty.

Key Additional Facts:

• Officers were seen viewing the photo in police stations and making lewd remarks.
• Multiple officers reported the image was being shared “everywhere” in the department.
• Carranza repeatedly asked the Department to issue a message stating the photo was not her and ordering officers to stop circulating it.
• LAPD leadership discussed issuing the statement but ultimately declined.

Why the Employer’s Position Was Complicated:
The City argued—and the evidence confirmed—that leadership faced a genuine dilemma:

• Issuing a department-wide notice might amplify the issue, causing 13,000 employees who had never seen the photo to now seek it out.
• Leadership feared that a public statement might increase curiosity and worsen the situation.
• They believed an ongoing investigation could be compromised by an all-hands notice.

Nevertheless, the Court held the employer liable because:

• The City took no visible action to stop or condemn the conduct.
• Carranza’s knowledge of widespread circulation alone was enough to establish a hostile work environment.
• The environment became “severe or pervasive” when the employer refused to repudiate the conduct.

Outcome:

• Jury awarded $4 million in noneconomic damages.
• Court of Appeal affirmed the verdict and the attorney fee award.

Employer Lesson:
Digital harassment—including doctored images, rumors, and misinformation—creates new challenges. Even when an employer’s instinct is to avoid “drawing attention,” FEHA requires affirmative action when harassment is known.

4. Hohenshelt v. Sup. Ct. (Golden State Foods Corp.) – California Supreme Court (2025) – Arbitration Fee Deadlines Clarified

This case addressed whether late payment of arbitration fees automatically forfeits the employer’s right to arbitrate under CCP §1281.98.

More Facts:

• The employer’s payment was slightly late due to internal administrative error.
• The employee attempted to escape arbitration by arguing the employer forfeited its rights.
• The trial court found forfeiture; the employer petitioned the Supreme Court.

The Supreme Court Held:

• The FAA does not preempt California’s statute—but the statute must be read consistent with traditional contract principles.
• There is no automatic forfeiture for late payment caused by mistake, excusable neglect, inadvertence, or non-willful delay.
• Courts must consider the specific circumstances.

Employer Lesson:
Employers should still implement tracking systems for arbitration invoices—but this case gives relief from “gotcha” attempts to weaponize minor payment delays.

5. Noland v. Land of the Free, L.P. – California Court of Appeal, Second District (2025) – AI “Hallucinations” Lead to $10,000 Sanction

This case has drawn attention as one of the first California appellate decisions sanctioning an attorney for unverified generative AI work product.

More Facts:

• Plaintiff’s counsel used AI to generate appellate arguments, including fake cases, fake quotations, and misstatements of law.
• The offending attorney admitted he had not read or verified the authorities and had used AI to generate the brief.
• The Court referred the attorney to the State Bar.

The Court’s Warning:

“[N]o brief, pleading, motion, or any other paper filed in any court should contain any citations...that the attorney responsible for submitting the pleading has not personally read and verified.”

Final Outcome:

• Judgment for the employer was affirmed.
• The attorney was sanctioned $10,000.

Employer Lesson:
AI-generated content is increasingly making its way into legal disputes, employee complaints, and internal reports. While it can be a good starting point Employers and counsel must verify accuracy—not assume AI outputs are reliable.

Final Thoughts

Across these decisions, a few themes stand out for California employers in 2025:

• Documentation = defense. Courts want to see real compliance efforts.
• Employer response matters. HR missteps often create more liability than the underlying misconduct.
• Silence is rarely safe. Especially in digital harassment cases.
• When in arbitration – ensure all fees are paid promptly to avoid losing ability to keep a case in arbitration.
• AI must be supervised. Verification is mandatory.