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As small business decisions continue to create outsized legal exposure, in-house counsel are tasked with spotting risks before they escalate. This article contains a collection of insights from Greenberg Glusker thought leaders that explores the hidden litigation risks of environmental marketing claims, California’s exempt salary threshold increase taking effect January 1, 2027, right of publicity exposure in marketing and AI use, and how employees’ AI prompts could end up in discovery.

Hidden Risks of Green Marketing

By Sedina L. Banks, Environmental

Environmental marketing statements can create unexpected litigation exposure. Consumer claims, including threatened class actions, are on the rise. Consumer-friendly states like California provide options to challenge allegedly false or misleading marketing statements, including the Consumers Legal Remedies Act, False Advertising Law, and Unfair Competition Law. One area of vulnerability companies may overlook is environmental marketing claims on product packaging, websites, and social media.

Broad, unqualified environmental benefit claims, such as “eco-friendly,” “green” and “sustainable,” are frequently targeted by consumer plaintiffs as deceptive or misleading. Plaintiffs also scrutinize representations regarding product ingredients and composition. Claims that a product is “all natural,” “non-toxic” or free of certain chemicals or ingredients must be adequately substantiated and not misleading to reasonable consumers.

To minimize litigation risks, companies should carefully review marketing statements before publication, review FTC’s Green Guides, as well as applicable federal and state laws and requirements. Legal should work closely with marketing and product teams and conduct periodic compliance audits. Proactive review can help companies avoid costly litigation, reputational harm, and the expense of revising existing product packaging.

California’s Exempt Salary Threshold Rises January 1, 2027

By: Wendy E. Lane, Employment

The California Department of Industrial Relations has announced that, effective January 1, 2027, the current minimum wage of $16.90 is increasing to $17.40 per hour. The raise also increases the salary-basis test for California’s executive, administrative, and professional overtime exemption categories.

For these exemptions to apply, California employers must pay a salary that is at least twice the state minimum wage (in addition to meeting the other duties requirements for those exempt classifications). To remain exempt, salaried employees must receive no less than $72,384 per year ($1,392 per week or $6,032 per month) beginning January 1, 2027. Local minimum wages do not affect the minimum salary threshold for exempt employees, as that is affected solely by the state minimum wage.

If an employee receives less than the minimum exempt salary in any pay period, they automatically become non-exempt during that pay period and they become eligible for overtime pay, even if their job duties fully qualify as executive, administrative, or professional. Employers should review salaried employees’ pay before January 1.

Whose Face Is in Your Marketing?

By: James R. Molen, Litigation

Right of publicity claims aren’t limited to celebrities. Any commercial use of a person’s name, voice or likeness can create exposure, whether that person is an employee, a customer or the voice talent behind your phone system. And AI is giving companies more ways to use people’s identities than ever before.

Here are five steps in-house teams can take now.

1. Separate the photo from the person. A copyright assignment or work-for-hire clause covers the image, but not the likeness of the person in it. Employee, contractor and influencer agreements should address both.
2. Match consent to the use. A release should spell out the media, duration, territory and purpose it covers. For example, if you plan to use a customer’s photo in a paid ad, make sure the original consent actually reaches that far.
3. Check before you clone. Before using AI to repurpose an old voice recording, look at what the original agreement granted. New agreements should address digital replicas explicitly, since California’s AB 2602 voids vague digital-replica provisions.
4. Run likeness diligence on AI vendors. Find out whether the training data was licensed or scraped, and require warranties on modeled voices and faces, publicity-specific indemnification, state-law compliance, insurance and deletion terms.
5. Draft for the strictest state. There’s no federal statute yet and state laws vary, so a national campaign that’s lawful in one state may violate the law in another. Consent and release forms should be drafted to comply with the strictest state.

What Your Employees Type Into AI Could End Up in Discovery

By: Eric M. Sefton, Litigation

Employees across most companies now use AI tools daily, and not always company approved ones. That creates a risk many legal departments haven’t addressed. At least one court has held that communications with an AI tool are not protected if they weren’t confidential and made at the direction of counsel. And litigants are already asking for AI prompts and outputs in discovery, hoping to find damaging admissions.

Steps to keep employees’ AI use from becoming the other side’s evidence include:

• Require company accounts. Business and enterprise versions of leading AI tools can keep user data out of model training and give IT departments tools to regulate and restrict employee use. Personal accounts often lack these safeguards.

• Draw clear lines. An AI use policy should specify what employees may not share with an AI tool, such as legal advice, outside counsel memos and commercially sensitive information. Training helps the policy stick.

• Bring counsel in early. When non-lawyers use AI to support a legal matter, contemporaneous documentation that counsel directed the work can help support privilege assertions.

• Re-evaluate regularly. AI tools are evolving rapidly, as are the ways that employees use them to support their work. Companies should stay current on these changes so training and policies remain appropriate.