Acting Secretary Keith Sonderling has replaced former Labor Secretary Lori Chavez-DeRemer, who resigned earlier this week amidst investigations into alleged misconduct. Plus: The DOJ announces the first anti-DEI settlement under its Civil Rights Fraud Initiative, while President Trump’s federal contractor DEI executive order is challenged in court.
DeRemer out, Sonderling in: Amidst a monthslong investigation into multiple allegations of misconduct—including an affair with a subordinate and the use of department resources for personal expenses and trips—Lori Chavez-DeRemer resigned her post as Secretary of Labor. Ms. DeRemer’s husband had also been accused of sexual assault at the Department.
The bottom line: Acting Secretary Sonderling has a longstanding positive relationship with the employer community and is seen on both sides of the aisle as a pragmatic policymaker focused on results over rhetoric. While other candidates for the position are possible—such as former Acting Secretary Pat Pizzella—Sonderling is seen as the clear frontrunner.
New joint employer rule: Amidst turnover at the top, the DOL released a new proposed rule on joint employer liability under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act.
The bottom line: Joint employer liability can potentially put an employer on the hook for the labor and employment violations of third parties with which it does business, making the applicable legal standard a significant risk point. The proposed rule would appropriately limit liability to cases in which an employer is clearly exercising direct control over the terms and conditions of employment of another entity’s employees.
DOJ reaches settlement with large company over alleged unlawful DEI practices: The Department of Justice announced a $17 million settlement with a major technology company, over allegations that the company unlawfully took race and gender into account in employment in violation of the company’s certifications under federal contracts between 2019 and 2026. This was the first settlement under the Department’s Civil Rights Fraud Initiative, announced in May 2025.
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The allegations included that the company used a diversity modifier that tied executive bonus compensation to achieving certain demographic targets, diverse candidate slates in recruitment, quantitative demographic goals that took race and sex into account, restricted access to training programs.
The bottom line: As part of the settlement, the company did not admit to any wrongdoing or illegal behavior. Even though the settlement amount is relatively small, the overall result underscores the administration’s ability to achieve the goals of its anti-DEI campaign without actually proving a practice is unlawful (in court or otherwise).
Meanwhile, Anti-DEI federal contractor executive order challenged in court: A new lawsuit seeks to block the latest anti-DEI federal contractor executive order on the basis that it is overly broad and violates free speech protections.
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Democracy Forward, the group bringing the lawsuit, alleges that the order “attempt to use intimidation or coerce” contractors into abandoning lawful practices and seeks an injunction blocking its enforcement.
The bottom line: Given the previous result, the new lawsuit is similarly unlikely to result in a lasting injunction invalidating the new executive order.
