What Will 2026 Mean for Employment Law Compliance?

Diversity, equity and inclusion (DEI) programs, artificial intelligence (AI) in the workplace, pay transparency, and noncompete laws will continue to be high-consideration areas for U.S. employers and their HR and total rewards (TR) professionals in 2026, according to labor law experts. 

This article provides perspective to help you craft or bolster your compliance strategies in these areas.

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Reverse Discrimination Cases on the Rise

DEI is a particular focus of current federal leaders, who both revoked Executive Order 11246 to end affirmative action in the federal government and issued an executive order targeting private-sector employers’ DEI efforts, said Victoria Carradero, a partner at Duane Morris LLP and a member of the law firm’s employment, labor, benefits and immigration practice.

Additionally, federal agencies like the Equal Employment Opportunity Commission (EEOC) have significantly shifted their priorities by narrowing the scope of discrimination theories they now pursue. Specifically, Carradero said the administration has diverged from the disparate impact theory of discrimination, and there is no longer a legal distinction between “reverse” discrimination and other forms of discrimination following the decision in the 2025 Supreme Court case Ames v. Ohio Department of Youth Services.

“In 2026, these changes will not only have major compliance implications but will likely lead to more plaintiffs’ attorneys stepping in to fill the void created by these policy shifts and take advantage of the opportunities created by the administration’s new focus areas,” she predicted.

Christopher DeGroff, a labor and employment partner at Seyfarth Shaw LLP, agreed with Carradero’s synopsis and forecast a rise in lawsuits by white males alleging workplace discrimination based on race and gender, as well as a spike in general EEOC-initiated litigation in this space.

“These nontraditional race and gender cases are being fueled by the current political and social environment,” he said. “The EEOC’s chair, Andrea Lucas, has been extremely vocal about this being an enforcement target for the agency. Now that the EEOC has a quorum and a Republican majority, it has the full set of tools to make good on its promises to target policies that disfavor white male workers.”

Given the current state, DeGroff advised you to:

• Conduct (with their internal or external legal partners) an audit of current policies to ensure they are legally compliant.
• Consider manager training on compliance “hot spots” to help decision-makers spot issues and know when to involve HR or legal teams.
• Anticipate emerging areas, such as a surge in pregnancy discrimination cases due to the recent enactment of the Pregnant Workers Fairness Act (PWFA).

“The PWFA includes detailed and significant accommodation provisions that depart from employer obligations under the ADA [Americans with Disabilities Act],” he said. “Despite attempts at compliance, many employers have been caught by surprise by some of these requirements, which has translated to significant legal vulnerability.”

In this area, DeGroff said the EEOC is taking an aggressive stance by taking legal action against employers across geographic regions and making claims highly visible.

AI and Automation Raise Risks

With employers becoming more intentional about the use of AI to reduce workplace complexity and remove barriers, more states are likely to introduce laws to ensure such technology is used in a nondiscriminatory manner and employees are given notice when it is being used, shared Jennifer Colvin, a Chicago office managing shareholder at Ogletree Deakins LLP.

In 2025, Colorado, Texas, New Jersey, California and Illinois adopted laws to regulate AI usage and prohibit employers from utilizing it in manners that can lead to discriminatory results. In California, regulations took effect on Oct. 1, 2025, that prohibit employers from using automated-decision systems for recruitment, hiring, promotion, training, pay, benefits, leave or termination processes that may illegally impact job applicants or employees based on any protected category.

2025 also saw two court cases around AI discrimination. In Mobley, et. al, v. Workday, the plaintiffs alleged Workday’s products tended to screen out job applicants based on protected categories.

In December, an executive order was issued to limit state governments’ powers to regulate AI.

Regardless of how the fight plays out, rapid AI and automation integration across HR and business operations raises legal and compliance risks, Carredero said.

If you opt to use AI in employment processes, he recommended that you:

• Have a firm grasp on how your automated systems operate — understand inputs, evaluate outputs, and consider unlawful discrimination risks; and,
• Work with leaders to perform system audits and develop record retention protocols to mitigate the risk of claims and strengthen defenses for using AI technology in employment-based decisions.

Pay Attention to Pay Transparency

Currently, 15 states and seven counties/cities across the U.S. have enacted pay transparency laws. Most require disclosure of salary or hourly pay ranges based on what the employer reasonably believes it may offer, and some states also require disclosure of benefits information and/or incentive compensation. Many HR and TR professionals will need to ensure their job postings are compliant with these laws.

If you have employees in multiple states, Carradero suggested that you consider applying the most restrictive state laws across the board, looking to laws in Colorado, Illinois and Minnesota as the possible standards.

Noncompete Clauses and Their Counterparts

In 2025, Virginia and Wyoming became the latest states to pass laws limiting the circumstances in which noncompete agreements may be enforced. More than 30 states now have statutory limits on the use of restrictive covenants in employment relationships.

“In this environment, restrictive covenants that violate state law or are overly broad are not just unenforceable but can result in civil penalties,” Carradero said.

In California, this noncompete focus is expanding with a new law that limits when employers can claw back signing bonuses or other types of compensation that might be paid in advance.

“It’s not uncommon for companies to pay retention bonuses or sign-on bonuses and include a payback requirement if the employee doesn’t stay for a certain period of time or doesn’t fulfill certain conditions, but California is now limiting those practices more significantly than it has in the past,” said Michelle Roberts Gonzales, a partner at Hogan Lovells LLP.

Right now, the law is state-specific, but emerging employment law trends in California tend to spread to other jurisdictions.

“California has always been very protective of workers’ ability to go from job to job; noncompetes are generally prohibited in the state,” Roberts Gonzales said. “There’s a line of thinking that those types of stay bonuses, sign-on bonuses and retention bonuses can have the same effect as a noncompete by locking employees into place and limiting their ability to move freely to another job.”

She stated this is particularly important for employers that rely on standardized bonus or incentive agreements, or have programs where they pay employees’ educational expenses.

“If you are using form agreements for these types of bonuses or other payments, look at them closely,” Roberts Gonzales said.

She also recommended that HR and TR pros tap into their organization’s legal teams early and often.

“Programs and agreements that may have existed for a long time need to be scrubbed to make sure they’re current,” she said. “That kind of housekeeping can easily fall by the wayside when people get busy. It’s really important to talk to somebody who understands the ins and outs of compliance, particularly in those areas where we know there are some changes in the law, because there are a lot of nuances.”

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

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