April 7 Federal Update: HHS Announces Major Restructuring 

On March 27, the U.S. Department of Health and Human Services (HHS) announced a significant restructuring aligned with President Trump’s executive order on government efficiency and workforce optimization.

The plan reduces HHS regional offices from 10 to five and eliminates an additional 10,000 positions, following previous downsizing efforts. In addition to HHS staff reductions, the Administration for Children and Families (ACF) has announced the immediate closure of five regional offices—Regions 1, 2, 5, 9, and 10—effective April 1. The restructuring consolidates existing divisions into 15 new units, including a newly established Administration for a Healthy America (AHA).

AHA will integrate several agencies—the Office of the Assistant Secretary for Health, Health Resources and Services Administration, Substance Abuse and Mental Health Services Administration, Agency for Toxic Substances and Disease Registry, and National Institute for Occupational Safety and Health. Its focus will include primary care, maternal and child health, mental health, environmental health, HIV/AIDS, and workforce development.

HHS also plans to establish a new Assistant Secretary for Enforcement to oversee the Departmental Appeals Board, Office of Medicare Hearings and Appeals, and Office for Civil Rights—aiming to curb waste, fraud, and abuse in federal health programs. Additionally, the Administration for Community Living will be absorbed into other HHS agencies, including the Administration for Children and Families, Assistant Secretary for Planning and Evaluation, and Centers for Medicare and Medicaid Services.

Lawmakers Examine Fair Labor Standards Act in Light of Modern Workforce

On March 25, the Subcommittee on Workforce Protections held a hearing to evaluate the Fair Labor Standards Act (FLSA), focusing on its effectiveness, challenges, and potential updates for today’s workforce.

Enacted in 1938, the FLSA established a federal minimum wage, overtime pay requirements, and child labor protections. With the rise of independent work and changes in technology and workplace practices, both lawmakers and witnesses called for reforms to better reflect the current labor landscape.

Witnesses emphasized the need for clearer definitions of employers, employees, and work to ensure fair pay. They urged updates to how overtime pay is calculated, along with clearer criteria for exempt status and compensable time.

Additional recommendations included strengthening the U.S. Department of Labor’s enforcement authority and enabling flexible schedules, learning opportunities, and nontraditional work arrangements to meet the evolving needs of workers and employers alike.

Congress Explores AI’s Role in K-12 Education

The Subcommittee on Early Childhood, Elementary, and Secondary Education held a hearing to examine the evolving role of technology in schools, with a focus on the opportunities and challenges of artificial intelligence (AI) in the classroom.

Lawmakers and witnesses discussed how schools can equip students to use AI responsibly while maximizing its benefits. A key theme was the need for standardized data protections that uphold student privacy.

Witnesses called for a strong federal framework to support cybersecurity infrastructure and interoperability standards. They also emphasized the importance of continued research to assess AI-related risks and of increased funding to close the digital divide and ensure equitable access to technology.

The hearing highlighted how AI can empower educators to personalize instruction, support students with disabilities, and better prepare students for a rapidly changing workforce. Witnesses noted that early exposure to AI tools could give students a long-term advantage in navigating emerging career paths.

Federal Student Aid Reopens IDR and Loan Consolidation Applications

The U.S. Department of Education’s Office of Federal Student Aid has reopened applications for income-driven repayment (IDR) plans and loan consolidation, following updates to comply with a federal court order.

The revisions stem from a Feb. 18 injunction issued by the 8th Circuit Court of Appeals, which temporarily blocks the Department from implementing the Saving on a Valuable Education (SAVE) Plan and certain provisions of other IDR plans. The injunction prohibits the use of the SAVE formula to calculate monthly payments and halts loan forgiveness under the SAVE, Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) plans.

Despite these restrictions, borrowers can still apply for the Income-Based Repayment (IBR), PAYE, and ICR plans using the updated application. 

Updates from the Judiciary 

Supreme Court Hears Arguments Surrounding Tax Exemption for Religious Organizations 

Catholic Charities Bureau Inc. is challenging a Wisconsin Supreme Court decision that denied the organization a religious exemption from state unemployment insurance taxes. The nonprofit argues that the state unconstitutionally rejected its exemption request, which Wisconsin law allows for organizations operated primarily for religious purposes.

Wisconsin contends that, while the organization may be religiously motivated, its services – such as job training for people with disabilities – are secular in nature and therefore do not qualify for the exemption.

The Wisconsin Supreme Court sided with the state, ruling that Catholic Charities is not operated primarily for religious purposes. The organization appealed, and the U.S. Supreme Court heard oral arguments on March 31.

Justices appeared likely to rule in Catholic Charities’ favor but expressed concern about the broader implications of expanding religious exemptions. Wisconsin’s Assistant Attorney General warned that such a ruling could jeopardize unemployment coverage for more than one million employees nationwide, including those working in religiously affiliated hospitals.

A decision from The Supreme Court is expected by the end of June.

Federal Court Blocks Enforcement of EDI Certification Requirement for DOL Grantees

A federal judge in the Northern District of Illinois has temporarily blocked the Department of Labor from enforcing part of an executive order that requires grantees to certify they do not operate equity, diversity, and inclusion (EDI) programs that violate federal anti-discrimination laws.

The judge ruled that the certification requirement likely violates free speech rights. The decision noted that the executive order’s vague language and lack of clear definitions of “illegal” EDI programs could lead to self-censorship by grantees seeking to avoid financial penalties.

The order extends to all Labor Department contractors and grant recipients and remains in place until April 10 while the court considers a permanent injunction.  

Federal Court Blocks Termination of Refugee Resettlement Contracts

The U.S. District Court for the Western District of Washington has issued an injunction halting the cancellation of contracts under the U.S. Refugee Admission Program (USRAP). The ruling follows an earlier nationwide injunction against an executive order that temporarily suspended refugee admissions.

In response to that first injunction, Secretary of State Marco Rubio moved to terminate all domestic resettlement agency cooperative agreements for reception and placement services, as well as all but one agreement supporting USRAP processing abroad.

Judge Whitehead ruled that the termination of these agreements would “effectively dismantle” USRAP and violate the earlier court order. The new injunction aims to preserve the status quo and prevent irreversible harm to refugee resettlement infrastructure as litigation proceeds.

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