Week in Review: 7 Legal Developments you Should Know About

As the academic year is now wrapping up, we hope that the final weeks of school have been relatively stress free, and that our clients are now looking forward to some slower summer days. Here at Franczek, we have continued to track legal developments that may impact our clients. However, as summer approaches, the pace of these developments also appears to be slowing. With the holiday weekend last week, we did not publish a weekly review. As such, below, please find the legal highlights from the past two weeks that warrant your attention.

Notably, the Supreme Court term is now coming to a close. Consequently, we have seen increased activity from the Court and we anticipate even more rulings being published in the coming weeks. At the end of the Supreme Court term, we will publish a Supreme Court Review in which we highlight the important cases from this term. For now, three of those cases – pertaining to the establishment of a religious charter school, the President’s power to remove agency officials, and federal judges’ authority to issue nationwide injunctions – are highlighted below.

In this week’s review, we also provide insights into three other federal court cases. The first pertains to the EEOC’s Pregnant Worker Fairness Act Rules and Transgender Protection Guidance. The second case blocked implementation of President Trump’s executive order dismantling the Department of Education. The third clarified protections available under the FMLA related to pregnancy and related conditions, specifically related to morning sickness. Finally, we provide an update on the impact of President Trump’s executive order on disparate impact discrimination. As always, should you have any questions about these developments or wish to discuss them further, please contact your Franczek attorney.

The Week in Brief:

1. Following Up on the Effect of Trump’s Executive Order on Disparate Impact Discrimination;
2. SCOTUS Rejects Establishment of Oklahoma Religious Charter School;
3. SCOTUS Temporarily Backs President’s Power to Remove Agency Officials;
4. SCOTUS Considers Federal Judges’ Authority to Issue Nationwide Injunctions;
5. Federal Judges Strike Down EEOC Pregnant Worker Fairness Act Rules and Transgender Protection Guidance;
6. Federal Judge Blocks Executive Order Dismantling the Department of Education; and
7. The Seven Circuit Clarifies that FMLA Protections May Extend to Pregnancy Related Morning Sickness.

Franczek Insights:

1. Disparate Impact: Federal Enforcement Deprioritized; Private Suits Remain Viable – by Reva Ghadge and Michael A. Warner, Jr.

In April, amid a flurry of other proclamations, the Trump Administration issued an executive order seeking to deprioritize enforcement by the federal government and rescinding a number of federal regulations which allowed for action on disparate impact discrimination liability under both Title VI and Title VII. Under a “disparate impact” theory of discrimination an employer or educational institution may be held liable for facially neutral practices that disproportionately impact individuals based on race, sex or other protected status even if the challenged practice is not intentionally discriminatory. Now, a month since the release of the order, it is time to take stock of what employers may face regarding disparate impact liability.

Title VII of the Civil Rights Act of 1964

Title VII prohibits unlawful employment discrimination. Although the Trump Administration guidance means that the EEOC will not be pursuing disparate impact lawsuits on behalf of employees, employers remain subject to private disparate impact lawsuits under Title VII. The executive order did not, and cannot, revoke the 1991Civil Rights Act amendments to Title VII which explicitly incorporated the disparate impact theory of liability originally recognized by the United States Supreme Court in 1971 in the case of Griggs v. Duke Power. Because this theory is explicitly authorized by the statute itself private individuals may still bring claims against their employers stating that neutral practices cause a disparate impact against a protected class and do not need to rely solely on federal enforcement efforts.

Title VI of the Civil Rights Act of 1964

The effect of the President’s executive order is more likely to be felt under Title VI of the Civil Rights Act of 1964 (“Title VI”). Title VI applies to any educational entity which receives federal funding, including federal contractors, public or private schools, or higher educational institutions and prohibits discrimination based on only race, color, or national origin in programs which receive federal funding. Unlike Title VII, Title VI has not been amended to explicitly prohibit disparate impact discrimination, Department of Education regulations, however, have long interpreted Title VI to prohibit disparate impact discrimination and courts have recognized that the federal government can sue for unlawful disparate impact discrimination under Title VI. However, the Supreme Court held in Alexander v. Sandoval (2001) that because the disparate impact theory is not in the statute itself, private parties cannot sue for disparate impact discrimination. Given the Trump Administration’s clear disinterest in pursuing disparate impact claims, there is essentially no remaining enforcement mechanism when it comes to disparate impact discrimination in education or in areas other than employment. Note that educational institutions still remain subject to disparate impact employment lawsuits under Title VII in their capacity as employers as discussed above.

Impact on State Law

The Illinois Human Rights Act (IHRA), like Title VII, prohibits disparate impact discrimination in employment, housing, and access to places of public accommodation, including schools. Both private individuals and the Illinois Attorney General’s Office both have the ability to bring suit under the IHRA for an alleged violation.

Also, the Illinois Civil Rights Act prohibits any governmental policy, not just employment policies, that have a disparate impact based on race, color, national origin, or gender. Here too, public schools and other public entities continue to face potential liability for policies and practices that have a disparate impact, regardless of the Trump Administration’s executive order.

Notably, the executive order also asked the United States Attorney General to determine whether federal law in this area preempts state law and to take action accordingly. Additional information in this area has not been released by the White House or Department of Justice, but we are monitoring and will provide updates as additional information becomes available.

With a clear movement against disparate impact liability at the federal level, but continuing avenues for enforcement by private citizens through Title VII for employment and under state law for both employment and other types of policies and practices employers and educational institutions face an uncertain future, to say the least. For assistance on these questions, please reach out to your Franczek attorney for additional guidance.

2. U.S. Supreme Court Affirms Decision Barring Religious Organizations from Operating Charter Schools – by Emily Tulloch*

On May 22, the U.S. Supreme Court affirmed an Oklahoma Supreme Court decision, in which the court rejected the establishment of a religious charter school, reasoning that such establishment violates the U.S. Constitution, the Oklahoma State Constitution, and other Oklahoma laws blocking the use of public funds for secular schools.

At issue in Oklahoma Statewide Charter School Board v. Drummond was a contract between the Oklahoma Statewide Virtual Charter School Board and St. Isidore of Seville Catholic Virtual School, a religious charter school. Before the Oklahoma Supreme Court, the Attorney General for the state of Oklahoma argued that the contract violated the State’s constitution, which requires charter schools to be nonsectarian, as well as the Establishment Clause of the U.S. Constitution, which prohibits states from using public funds for the establishment of religious institutions. The Oklahoma Supreme Court held in a 6-2 decision that establishing a religious charter school did, in fact, violate the Oklahoma State and U.S. Constitutions. The case was subsequently appealed to the U.S. Supreme Court.

The U.S. Supreme Court’s May 22 decision was issued following a 4-4 vote, with Justice Barrett abstaining from the consideration and decision of the case. Due to the split vote, the U.S. Supreme Court’s decision is only binding in Oklahoma, meaning it does not have a nationwide effect. While this decision does not affect a charter school’s ability to be affiliated with or contract with religious organizations nationwide, the case provides guidance as to how other state courts may interpret the constitutionality of such arrangements.

*Also authored by Jennie Harding, a second-year law student at Loyola University Chicago School of Law. Jennie is an extern at Franczek P.C. Loyola’s externship program provides law students with practical experience at law firms and organizations. Students receive academic credit for their externship experience.

3. SCOTUS Temporarily Backs President’s Power to Remove Agency Officials – by Rachel Domash

Part of the saga regarding the appointments of NLRB Member Gwynne Wilcox and MSPB Member Cynthia Harris concluded this week. We previously summarized the status of their appointments in our March 7, 2025 Week in Review and our April 11, 2025 Week in Review. As we reported, both Wilcox and Harris objected to their removal from their respective boards and this objection had reached the United States Supreme Court. In April, after the U.S. Court of Appeals for the District of Columbia reinstated the board members, the Trump Administration immediately appealed. Chief Justice John Roberts issued an administrative stay of the D.C. Circuit’s order, which temporarily upholds the Administration’s removal of Wilcox until the Supreme Court can issue a full decision on the matter.

On May 22, 2025, the Supreme Court, in a 6-3 decision, extended Justice Robert’s administrative stay.  The Court reasoned the President may remove, without cause, any executive officer who exercises executive power on the President’s behalf, subject to narrow exceptions. Though the Court did not rule definitively on the issue, the majority noted in the decision “that the Government is likely to show that both the NLRB and MSPB exercise considerable executive power.”

Three Justices (Justices Kagan, Sotomayor, and Jackson) warned in their dissenting opinion that the extended stay undermines the longstanding precedent of Humphrey’s Executor v. United States, a 1935 case in which the Supreme Court upheld Congress’s authority to limit presidential removal of officers in independent agencies. The dissenting opinion additionally criticized the majority for bypassing full briefing and using the emergency docket to potentially rewrite nearly a century of administrative law. The dissent emphasized that the majority’s decision favors the President over Supreme Court precedent and “does so unrestrained by the rules of briefing and argument.”

With the administrative stay extended, both the NLRB and MSPB remain without a quorum, preventing them from issuing decisions or new regulations. The lack of quorum will likely continue until the Supreme Court issues a final decision.

 4. SCOTUS Considers Federal Judges’ Authority to Issue Nationwide Injunctions – by Hailey Golds

On Thursday, May 15, the Supreme Court heard oral argument in Trump v. CASA, the case that addressing whether federal district court judges should be able to issue so called “universal” preliminary injunctions enjoining the enforcement of government policies they find contrary to law. The underlying lawsuit challenges the constitutionality of President Trump’s “Protecting the Meaning and Value of American Citizenship” executive order limiting the scope of birthright citizenship. The oral argument did not address the merits of the executive order, and  focused only on whether lower courts have jurisdiction to enter injunctions prohibiting enforcement of the order nationwide.

In recent years, federal district court judges have issued orders enjoining executive actions from both Democratic and Republican administrations, blocking student debt relief efforts and protections for asylum seekers under President Biden, postponing the enforcement of  a “Dear Colleague” letter and diversity, equity, and inclusion related executive orders issued by President Trump, including the executive order seeking to end “birthright citizenship” that was the subject of the oral argument.

During oral argument, the Trump Administration asserted that nationwide injunctions are judicial overreach in all but extreme cases, and that injunctive relief should be limited to the parties to a lawsuit. The respondents argued that limiting the ability of district court judges to enjoin unconstitutional or unlawful government action would leave individuals that are harmed by the action but lack the time or resources to file a lawsuit themselves without recourse. They pointed out that it often takes years for these types of challenges to reach the Supreme Court.

The Supreme Court is expected to issue a decision in this matter in the coming months. In the meantime, federal courts continue to exercise their ability to unilaterally prevent enforcement of current and previous federal government actions. Notably, the Republican controlled Congress also is starting to take steps to limit the ability of federal courts to issue nationwide injunctions in court challenges to legislative action. For instance, the spending bill approved by the House of Representatives on May 21 includes a provision that would prevent federal courts from issuing contempt citations for failure to comply with an injunction or temporary restraining order unless the movant provides a bond to cover potential damages caused by the order. In practice, this would restrict the authority of federal courts to hold government officials in contempt when they violate court orders and weaken the impact of nationwide injunctions.

5. Federal Courts Strike Down EEOC Transgender Protection Guidance and Pregnant Worker Fairness Act Rules – by Michael A. Warner, Jr. and Hailey Golds

The EEOC continued to move away from the former administrations’ policies last week as courts vacated portions of a Final Rule and guidance issued by the EEOC under President Biden and Acting Chair Andrea Lucas issued new guidance regarding enforcement and retaliation at federal agencies.

A. Gender Identity Guidance

On Thursday, May 15, a federal judge in the Northern District of Texas vacated portions of anti-harassment guidance  issued by the EEOC in April of 2024 defining sex to include “sexual orientation” and “gender identity,” including “sexual orientation” or “gender identity” as a protected class, and outlining harassment based on either classification. According to the EEOC at the time, the intent of the revised Guidance was to align the Agency’s guidance with Bostock v. Clayton County, in which the Supreme Court held that Title VII’s prohibition on sex discrimination includes discrimination based on sexual orientation or gender identity.

Notwithstanding the Supreme Court’s ruling in Bostock, the district court for the Northern District of Texas held that the EEOC exceeded its statutory authority by issuing guidance requiring bathroom, dress, and pronoun accommodations, and found that these requirements are “inconsistent with the text, history, and tradition of Title VII and recent Supreme Court precedent.” The court reasoned that the guidance contravenes Title VII by expanding the scope of “sex” beyond the “biological binary” of male and female. The court’s vacatur of the portions applies nationwide, not just to the parties in the case.

Notably, in Bostock, the Supreme Court found that Title VII prohibited discrimination based on gender identity and sexual orientation, but the Court expressly noted that it was not “addressing bathrooms, locker rooms, or anything else of the kind” (including, presumably, pronoun usage) and that those were “questions for future cases.”  Thus, while employment discrimination based on gender identity and/or sexual orientation remains unlawful under Title VII, the precise parameters of what sort of conduct might create a prohibited hostile environment based on gender identity remains highly uncertain and undoubtedly a potential subject for further litigation.

B. Pregnant Worker Fairness Act Rules

On Wednesday, May 21, a federal judge in Louisiana ordered the EEOC to remove portions of a Final Rule issued in April of 2024 requiring companies to accommodate employees who choose to have an abortion under the Pregnant Worker Fairness Act. Specifically, the Rule says that having an abortion constitutes an example of pregnancy, childbirth, or related medical condition and that employers are therefore required to provide employees with reasonable accommodations for abortions. The Rule also prohibited employers from taking adverse employment actions against employees who request accommodations for abortions. In its order vacating the Rule, the court found that these requirements violate the Administrative Procedure Act and that the EEOC had exceeded its authority by including elective abortion in the Rule when the Act itself does not do so.

C. Other EEOC Actions

The EEOC also issued two memorandums on May 22, 2025, continuing to reshape the Agency to conform to the goals of the new Administration. The first, “Ending Unauthorized Monetary Sanctions Against Federal Agencies,” states that the EEOC will no longer impose monetary sanctions that fail to comply with the EEOC’s orders in administrative proceedings. The memo asserts that doing so violates the principle of sovereign immunity. The second memo, “Restoring and Protecting the Presumption of Innocence in the EEO Complaint Process,”  encourages federal agencies to not take “retaliatory” actions against federal government employees who are subjects of EEO complaints, including by delaying promotions while an investigation is pending, and indicates that the EEOC is working to reform the federal EEO process to fix a process that the memo asserts has “ossified and become unduly slow, erratic, and painful.”

6. Judge Blocks Executive Order Dismantling the Department of Education – by Kristen Kinast

As we previously reported, President Trump issued an executive order on March 20, 2025, instructing the Department of Education (“DOE”) Secretary Linda McMahon to take all necessary steps to “facilitate the closure of the Department of Education.” Since the issuance of this executive order, there have been numerous challenges to it throughout the country.

On Thursday, May 22, 2025, a federal judge blocked the Trump Administration’s executive order dismantling the DOE, effectively halting implementation of the executive order at this time. In his order, the judge accused the executive order of taking all the necessary steps to close the DOE, which goes directly against Congress’s intent in creating the DOE. The judge stated that the Trump Administration cited no case law supporting a president’s power to dismantle Congressionally created departments and programs through mass terminations.

The judge also granted a preliminary injunction to temporarily reinstate hundreds of DOE employees who were previously laid off by the Trump Administration. The judge opined that the Trump Administration’s actions in mass firing hundreds of DOE employees prevented the federal government from effectively implementing legally required programs and services. In his order, the judge stated that delays and uncertainty in the receipt of federal educational funding by states and school districts jeopardizes the missions of ensuring an educated citizenry and providing quality education.

The Trump Administration has filed an appeal of the decision. We will continue to follow this case and the other lawsuits challenging this executive order.

7. 7^th Circuit Court Affirms FMLA May Extend to Pregnancy Morning Sickness – by John Swinney

In Davis v. Illinois Department of Human Services, plaintiffs Dyamond Davis and Antionette Burns, former employees of the Shapiro Development Center, alleged violations of the Family and Medical Leave Act (FMLA) after being terminated by the Illinois Department of Human Services (DHS). Davis claimed she was wrongfully terminated for taking leave due to pregnancy-related morning sickness, while Burns asserted a similar claim. The lower district court dismissed Burns’s claim for lack of standing (a legal principle that requires an individual actually suffer an injury in order to bring a lawsuit) and granted summary judgment in favor of DHS on Davis’s claim. Davis appealed both decisions.

At the appellate level, the Seventh Circuit affirmed the dismissal of Burns’s claim, finding she lacked standing to sue. However, the court reversed the summary judgment in favor of DHS on Davis’s claim, concluding that genuine disputes of material fact existed regarding whether DHS interfered with her FMLA rights. Importantly – and as a key takeaway from this case – the court emphasized that FMLA protections extend to leave taken for pregnancy-related conditions, specifically including morning sickness. Notably, the case is not over yet, as the Seventh Circuit remanded it for further proceedings before the lower court to resolve remaining factual disputes. We will continue to monitor this case and report on the decision from the district court.