WPI Labor Day Report: Ten Issues Shaping the Workplace in 2026

As the end of the second year of the second Trump administration draws near, federal agencies are gaining momentum. While immigration enforcement and anti-DEI efforts have garnered the most media attention, other issues impacting the workplace are changing the way employers operate. This Labor Day, Littler’s Workplace Policy Institute takes a look at ten notable developments and trends affecting employment. 

1. U.S. Department of Labor Proceeds with Active Rulemaking Itinerary

The U.S. Department of Labor has had an active year, notably its Wage and Hour Division, which released two proposed rules to regulate independent contractor status under federal wage-and-hour laws (and other laws within its jurisdiction), as well as a standard for joint-employment under those same laws. 

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The independent contractor proposal largely tracks the final rule issued by the Department in the last days of the first Trump administration. The Biden administration first attempted to delay and later repeal the first Trump rule in its entirety. When that effort was rebuffed by courts, the Biden administration then promulgated a new rule that largely rested on an unweighted multi-factor test which had been administered (not uniformly and not consistently) by various courts. Numerous legal challenges were filed against the Biden rule, but they have been stayed since the start of the new administration when the Department of Labor indicated it would be reconsidering that rule and would likely propose a new one.¹

Like the prior Trump rule, the new proposed rule relies heavily on a weighted, two-factor test to distinguish employees (who are protected under the law which governs, among other things, overtime and minimum wage requirements) and independent contractors (who are not). It focuses on two “core” factors—an employer’s right of control over a worker, and the worker’s opportunity to realize profit (or suffer loss)—as the key determinants of independent contractor status. When both of those factors point in the same direction (either toward employee or independent contractor classification), the rule provides that in almost all instances this will be the correct classification. The proposed rule, also like the prior rule, provides three “sub-factors”—whether the work requires specialized skills, the permanency of the work relationship, and how closely the work is integrated into a production process—to be analyzed when the two “core” factors are not in alignment. The comment period on the rule closed on April 28, 2026, and a final rule is expected to be issued by year’s end.

The joint employer proposed rule is likewise similar to a rule issued by the Department during the first Trump administration, which was struck down by the U.S. District Court for the Southern District of New York in a challenge brought by a coalition of state attorneys general. The newly proposed rule is in many ways like the prior rule, although it does differ in some respects in an attempt to respond to the underlying legal concerns addressed by the court. The proposed rule discusses both “vertical” and “horizontal” joint employment. 

In a “vertical” joint employment scenario, an employee is jointly employed by two or more employers that simultaneously benefit from the employee’s work. Typically, the employee works one set of hours and there is no dispute that the employee has at least one employer for the work; the issue is whether another company that also benefits from the work is the employee’s joint employer. The proposed rule sets forth a four-factor analysis of vertical joint employment, examining whether a potential joint employer: (1) hires or fires the employee; (2) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree; (3) determines the employee’s rate and method of payment; and (4) maintains the employee’s employment records. While the “reserved” right of control is part of the analysis, this theoretical “right” to control it is less probative than the actual exercise of control. The rule also provides that certain factors are not relevant to the joint-employer analysis, such as the business model used by the employers (such as in the franchise context), or whether the employee has the opportunity for profit or loss based on their managerial skill (relevant in the independent contractor analysis). 

With respect to “horizontal” joint employment, this analysis is used when an employee works separate hours for two or more employers, and the employers are “sufficiently associated” with each other with respect to the employment of the employee such that they are joint employers. 

Under the proposed rule, employers will generally be “sufficiently associated” if: (1) there is an arrangement between them to share the employee’s services; (2) one employer is acting directly or indirectly in the interest of the other employer in relation to the employee; or (3) they share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control with the other employer. 

The comment period on the proposed rule closed on June 22, 2026, and we anticipate that the Department will attempt to finalize the rule as quickly as possible. Relatedly, and as discussed further in this report, a proposal to narrow the standard for joint employment specifically in the context of franchise businesses passed the U.S. House of Representatives earlier this year and is now pending in the Senate. 

The Department also formally repealed a Biden-era rule which would have increased the minimum salary necessary to qualify for the Executive, Administrative, and Professional exemption (commonly called the “white-collar” exemption) under the Fair Labor Standards Act. The rule was previously enjoined on a national basis by the U.S. District Court for the Eastern District of Texas, so its rescission is somewhat of a formality. Since the court decision striking down the Biden-era rule, the salary threshold for exempt status reverted to $684 per week (equivalent to $35,568 per year), established in 2019 under the first Trump administration. Whether the Department will seek to raise that threshold in the second administration remains unclear, although no proposal to do so has been on the Department’s regulatory agenda.

These proposals follow the WHD’s reinstatement of the PAID (Payroll Audit Independent Determination) program, which encourages employers to self-audit wage-and-hour practices. If in doing so it discovers any potential violations, the employer can work with WHD to make employees whole for any wages due, and, if paid promptly, avoid the possibility of potential litigation, liquidated damages, and attorneys’ fees. Employers contemplating using the PAID program may wish to consult counsel to discuss audits and relief. 

The Department has also shown a renewed interest in issuing opinion letters, with WHD issuing over two dozen since the start of the second Trump administration. Opinion letters are official written opinions on how DOL interprets and enforces laws within its jurisdiction when applied to a specific fact pattern. They are, in the Department’s words, designed to provide “practical answers to help the public understand their rights and responsibilities” under these laws. More substantively, an employer that relies in good faith on a written Department interpretation may use it as a defense to liability in a wage-and-hour lawsuit. Information about opinion letters may be found here, and again, employers contemplating requesting an opinion letter are advised to consult with counsel.  

Finally, with respect to Project Labor Agreements and prevailing wage requirements under the Davis-Bacon Act (also enforced by the DOL), with regard to the construction industry, the Department recently agreed to vacate three sections of the Biden administration’s controversial prevailing wage regulations, which had been ruled unlawful by the court. But the Department also recently announced that it will not make any further rulemaking revisions on this issue absent court action. A suit challenging these rules more broadly remains pending. Similarly, litigation challenging the legality of union-only project labor agreements continues at both federal and state levels.

2. OSHA’s Proposed Rule for Heat Injury and Illness Prevention – Yes, it’s Still On

More than two years ago, the Occupational Safety and Health Administration (OSHA) published a proposed standard that would regulate employee exposure to heat in indoor and outdoor workplaces.² In the proposed regulatory text, OSHA defined initial and high-heat triggers (80°F and 90°F, respectively), that when reached require employers to provide certain protections including specific amounts of cool drinking water, paid rest breaks, acclimatization for new and returning workers, effective communications with employees, training on recognizing the signs and symptoms of heat-related illness, and having a written plan in place if an employer has more than 10 employees, and emergency response procedures, among a host of other requirements.

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Throughout the rulemaking process,³ numerous and varied stakeholder groups engaged with OSHA by submitting comments, testifying during the informal public hearings, and presenting post-hearing briefings. In all, more than 24,000 documents were submitted to the rulemaking docket. Many stakeholders argued the proposed standard was too prescriptive, inflexible, and adopted a “one-size-fits-all approach” that did not work well for small businesses or those with only a few employees. Still others contended it did not go far enough to properly protect workers. 

As OSHA works its way through these submissions, a recurring question many are asking, given the current deregulatory approach taken by the Trump administration, is whether the agency intends to move forward with this standard at all. The short answer is “yes.” Given that OSHA has consistently said heat illness is a recognized hazard, a position affirmed by the Occupational Safety and Health Review Commission in the 2019 A.H. Sturgill Roofing. Inc. decision, OSHA will move forward with a proposed standard.

With that out of the way, the biggest question now is: What will a final rule look like? Many stakeholders have urged OSHA to revise the proposed rule to focus on water, rest, shade, and training for employees, all while making it more performance-oriented. Others continue to urge OSHA to publish the final rule as originally proposed, while still others argue the standard does not go far enough. Substantial revisions to the original proposal, either to streamline or strengthen the regulatory text, will require OSHA to reopen the docket to accept comments on any substantially altered proposal. Otherwise, any final rule OSHA publishes would be subject to a legal challenge under the Administrative Procedure Act because the public was not able to review and comment on the final regulatory text. 

We have heard anecdotally that OSHA is planning to repropose a revised standard, publish it in the Federal Register, and reopen the docket to accept comments on those revisions. Although nothing has yet been published in the Federal Register, we anticipate this will occur soon since the current administration is running short on time to publish a final rule ahead of a mid-2028 deadline to ensure that it will not be invalidated by the Senate pursuant to the Congressional Review Act.

Littler will continue to report on any significant developments related to this proposed standard. 

3. More than a Quorum at the NLRB

For almost two years, the National Labor Relations Board has been stuck in neutral. It spent the first year of the Trump administration without a quorum and, therefore, unable to issue decisions. Then, and it spent most of the second year without enough votes to revisit its own precedent based on a self-imposed, unwritten custom of deciding not to overturn its precedent without a concurrent majority of at least three votes. But now, with the confirmation of James Macy and the re-confirmation of David Prouty, it may finally get into gear and reconsider controversial Biden-era decisions and/or create new precedent of its own. Whether it will, however, is an open question.

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The Lost Years

The Board spent most of 2025 frozen. After President Trump took office, he quickly fired then-Member Gwynne Wilcox, dropping the Board to two members. When then-Member Marvin Kaplan left in August of that year, that number dropped to one. By statute, the Board needs three members for a quorum to perform its official functions. Without a third member, it was stuck.

That situation persisted until December 2025, when the Senate confirmed two of the president’s nominees. But even then, the Board had only two Republican members. By tradition, the Board has chosen to overturn its own precedent only when it has three concurring members. These three members did not concur to overturn any of the prior Board’s decisions. 

On August 5, 2026, the Senate confirmed a fourth member, James Macy. It also confirmed current member David Prouty to a second term. That leaves the Board with three Republican members and one Democrat. For the first time in this administration, employers have reason to believe that the Board may vote to change policy.

The Task Ahead

There is a lot to revisit. During the Biden administration, the Board decided a series of cases that dramatically moved the law, sometimes overturning decades of precedent. Among other things, it broadened the Board’s remedies, expanded workers’ property access, restricted severance agreements, cracked down on employee handbooks, outlawed “captive audience” meetings, and revamped the Board’s approach to elections—including its authority to issue bargaining orders. Facing that output, the Board could easily spend the next two years doing nothing but bringing the law back to the pre-Biden-Board state, if it chose to do so.

At the same time, it remains to be seen whether the Board may instead choose to create policy through rulemaking. In March 2026, the Sixth Circuit held that the Board cannot engage in rulemaking through the adjudicatory process. If the Board makes new policy in a case, the new policy has to come from that case’s facts. And if the Board wants to make policy divorced from the facts, then it must do so by rule. The Board seems to prefer policy creation through the traditionally less-time-consuming process of adjudication and filed a petition asking the full court to reconsider the decision, which the court denied. But if the decision holds, and it is picked up in other circuits, it could constrain the Board’s power to make policy without making rules.

Also looming is the Board’s new “dependent” status. For most of its history, the Board has been considered an independent agency—its members could be removed only for cause. But in June, the Supreme Court held in Trump v. Slaughter that for-cause removal for the heads of multi-member agencies is unconstitutional. Lower courts have already started applying that rule to the Board.

Most recently, on August 26, 2026, NLRB General Counsel Krystal Carey released a memorandum to regional directors and other senior staff outlining a number of Biden-era precedents she is seeking or will seek to overturn, including many of the cases discussed above.

Whether this Board will effectively overturn its own precedent or create policy via rules remains to be seen. It faces big expectations and a short timeline. It is effectively starting work two years into the administration. The last Board took nearly four years to issue its most important decisions. If this Board is to have a similar impact, it will have to move twice as fast.

4. Bipartisan, Bicameral Labor Reform Efforts Happening on Capitol Hill

The Faster Labor Contracts Act (FLCA) is a bipartisan bill that, if enacted, would dramatically change federal labor law by allowing the government to impose mandatory binding arbitration of first union contracts on private-sector employers. 

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It is a rare occasion for a labor reform bill to first gain bipartisan, bicameral support on Capitol Hill and then actually pass one of the chambers. The FLCA, however, passed the House of Representatives via a successful Discharge Petition (a parliamentary procedure used to force a bill out committee and onto the House floor for a full vote, requiring the signatures of 218 members to succeed) led by Rep. Donald Norcross (D-NJ) on June 9 by a vote 230-193, with 20 Republicans joining Democrats to pass the bill. The bill is now pending in the U.S. Senate for consideration. 

If enacted, the bill would require parties to begin bargaining within 10 days. If no agreement is reached in 90 days, the parties would be shuttled into mediation where the Federal Mediation and Conciliation Service would preside. If mediation failed to produce an agreement after 30 days, the parties would be forced into binding arbitration where federal arbitrators (who may lack experience, know nothing of the underlying dispute, and have no knowledge of the industry or the workforce dynamics) would write all the terms and conditions of the contract—wages, benefits, health/safety rules, workplace policies, etc., with no opportunity for appeal. The contract would be binding on the parties for two years. 

The bill is fraught with legal and practical problems. Anyone who has been involved in private-sector collective bargaining, especially with respect to first contracts, knows such a tight timeline is unrealistic. Moreover, the FLCA undermines the private sector’s freedom to negotiate and contract, and doing so raises serious questions about due process and property rights. The legislation risks creating binding contracts that may be unworkable for the parties. Workers would lose their voice in the process by losing the ability to vote on their own contract. Under current law, the parties are already required to bargain in good faith, and there are penalties and enforcement tools in place for failure to do so. 

Given the 60-vote threshold needed to overcome a potential filibuster, the bill appears unlikely to pass the Senate this year, notwithstanding key support from Republican Senators Josh Hawley, Bernie Moreno, and Roger Marshall. However, with midterm elections coming up this fall, the political landscape could certainly shift in the next Congress, allowing the bill to advance. It is unknown where the White House stands as the administration has not issued a Statement of Administration Policy (SAP) for or against the bill. 

The bill continues to face opposition by major business groups, including the Coalition for a Democratic Workplace (CDW), which represents a broad array of employer groups and business organizations that employ tens of millions of workers nationwide in nearly every industry. 

5. With a Restored Quorum, a Re-Empowered EEOC Moves Aggressively to Advance Administration’s Agenda

The U.S. Equal Employment Opportunity Commission—which spent most of 2025 without a working quorum or Republican majority—was hampered in its ability to move forward aggressively on its policy priorities, although Chair Lucas used her power as chair to advance her initiatives as fulsomely as possible. Now, with a restored quorum, we anticipate the agency will kick into “high gear,” as it moves forward on investigations, guidance, regulation, and high-stakes litigation.

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By way of background, on Inauguration Day in 2025, the president designated Commissioner Andrea Lucas (who had served on the Commission since 2020) as the agency’s acting chair (later removing the “acting” designation), and shortly thereafter fired two of the EEOC’s sitting Democratic commissioners, leaving the Commission with only two sitting members—Lucas (whose term expires July 1, 2030) and Democrat Kalpana Kotagal, who has served on the Commission since 2023, and whose term is scheduled to expire in July 2027. 

This left the Commission without a quorum, making it unable to make new policy, revisit old policies, or take any significant action that would require the approval of a majority of the Commission. It also meant that the agency was limited in its ability to bring certain classes of significant litigation, including lawsuits alleging systemic or “pattern or practice” discrimination, or cases presenting unsettled matters of law, and unable to file amicus briefs in court. This changed in October 2025, when the U.S. Senate confirmed the nomination of Republican Commissioner Brittany Panuccio for a term expiring in July 2029, restoring the Commission’s quorum, and giving the agency a two-to-one Republican majority. Since the agency regained its quorum, the chair has moved quickly forward, no doubt mindful of the upcoming midterm elections, which may change the political landscape in Washington, DC.

Among her most significant efforts have concerned “unlawful” DEI, discussed in greater detail below, as well as the rights of religious employees in the workplace, LGBTQ+ discrimination, “anti-American” national origin discrimination, and employer demographic information collections.

Religious Employees. During the first Trump administration, then-Commissioner Lucas co-chaired a working group that focused on the rights of religious workers, and anti-religious discrimination in the workplace. She also supported the Commission’s revision of its guidance on religious discrimination, which placed heavy emphasis on the need for employers to accommodate the religious practices of their employees. 

An employer’s duty to provide religious-based accommodation remains a developing area of the law since the Supreme Court’s decision in Groff v. DeJoy, which dramatically increased the burden on employers to show that a requested religious accommodation is an undue hardship. Given Lucas’s stated priorities and long-standing interest, and the favorable climate in many courts, we expect that the EEOC in its investigations and litigation will seek to construe DeJoy as broadly as possible in favor of religious workers and continue to make investigation and enforcement of charges of religious discrimination or harassment a focus. Lucas has also publicly indicated her desire to hold employers accountable for what she views were overbroad actions involving religious employees during the COVID-19 pandemic. Indeed, religious-discrimination litigation appears to have become a larger share of the EEOC's enforcement docket in 2025 (even before it regained its quorum) than it had been for much of the prior decade, and we predict that trend will continue. 

LGBTQ+ Discrimination. Almost immediately after the new administration was inaugurated, the EEOC removed from its website a number of resources relating to sexual orientation and gender identity discrimination published during the prior administration, and in January 2025 indicated that all charges alleging discrimination on the basis of sexual orientation or gender identity would be sent to national headquarters for review to ensure that they “comply with applicable executive orders” to the fullest extent possible. At this writing it is unclear whether all charges alleging discrimination on the basis of sexual orientation or gender identity are yet subject to this review.

In January 2026, the EEOC voted to rescind its Enforcement Guidance on Harassment in the Workplace. The rescission is based on the administration’s contention that the Supreme Court’s decision in Bostock v. Clayton County, in which it held that Title VII’s prohibition of discrimination “because of … sex” prohibits discrimination on the basis of sexual orientation and gender identity, has been interpreted too broadly. Among the reasons given for rescission of the document by the chair was its position that as a result of Bostock, employers must provide trans-identifying employees access to single-sex spaces such as bathrooms, locker rooms, and changing rooms in accordance with their gender identity.

More recently, the Commission voted 2-1 to allow government agencies to exclude workers including “trans-identifying employees” from “opposite-sex facilities” like bathrooms and other intimate spaces. The ruling largely reverses a 2015 federal-sector decision in which the EEOC that found the Army discriminated against a transgender worker by not allowing her to use the women’s bathroom and misusing male pronouns. While the decision applies only to federal agencies subject to EEOC administrative complaint process for federal employees, and not directly to private-sector employers, it is an insight into how the agency views these matters broadly. 

At the same time, while the threat of EEOC enforcement of Title VII with respect to LGBTQ+ workers may be reduced, employers must bear in mind that unless and until changed, Bostock remains the law of the land, and, equally important, more than half of the states in the country separately protect sexual orientation and/or gender identify under state civil rights laws, which are not vacated or diminished by the EEOC’s actions or interpretations of the law.

Pregnant Workers. In December 2022, Congress enacted the Pregnant Workers Fairness Act (PWFA). Modeled after the Americans with Disabilities Act, the PWFA expands the protections for pregnant employees and applicants by requiring employers with 15 or more employees to make reasonable accommodations to known limitations related to pregnancy, childbirth, or related medical conditions. Employers must provide pregnant workers with reasonable accommodation, provided it does not impose an undue hardship on the employer. 

In 2024, the EEOC adopted expansive regulations implementing the PWFA, which dramatically expanded the scope of “pregnancy, childbirth or related medical conditions” under the statute to encompass almost any medical condition arguably related to the reproductive system. As a commissioner, Lucas voted against the regulations. Separately, portions of the final PWFA regulations requiring employers to make reasonable accommodation for elective abortions were struck down in May 2025 by a federal district court. Given these facts, it is likely that the EEOC will revisit PWFA regulations in the near future, with most predicting a proposal to replace the current rule with something more narrow and focused directly on accommodating pregnant workers during periods of limitation in their pregnancy.

“Anti-American” National Origin Discrimination. In keeping with the chair’s stated goal of “protecting American workers from Anti-American national origin discrimination,” in November 2025 the agency issued a one-page technical assistance document regarding national origin discrimination. The agency also announced that it had updated its national origin discrimination landing page so as to provide workers and employers with information about “what national origin discrimination can look like in the workplace” and how employees may obtain EEOC assistance if they feel they have been the victim of discrimination.

The technical assistance document defines national origin discrimination as “treating employees or applicants unfavorably or favorably because they are from a particular country or part of the world, because of ethnicity or accent, or because they appear to be of a certain ethnic background,” and provides several examples of fact patterns that might present unlawful discrimination, including using discriminatory job advertisements, such as ads that suggest an employer prefers or requires applicants from a particular country or with a particular visa status; engaging in disparate treatment; or making it more difficult for applicants from one national origin to apply for positions. Again, we expect the EEOC to continue to prioritize its investigations and litigation regarding this issue.

Demographic Data Collection. On July 21, 2026, the EEOC issued a proposed rule that would rescind a series of agency demographic reporting requirements, most notably the EEO-1 Form, which private employers of 100 or more employees (and certain smaller government contractors) have been required to file for decades. These reports required employers to break out their workforces by race, ethnicity, sex, and broad job category. On August 11, 2026, the agency held a public hearing on its proposal. Nearly two dozen witnesses testified at the hearing, with the vast majority supporting an effort to update or maintain the existing EEO-1 data collection requirement rather than eliminate it wholly. This fact notwithstanding, it is widely expected that the EEOC will vote to formally rescind this requirement entirely later this year. The comment period on the rescission proposal closed on August 24, 2026. Employers considering whether to continue collecting this information even in the absence of an EEOC requirement, may wish to consult with counsel.

EEOC Continues to Prioritize Pursuit of “Illegal” Diversity, Equity, and Inclusion Programs

The elimination of so-called “illegal DEI” in the workplace has been perhaps the most prominent focus of the EEOC’s agenda. In the first days of his second administration, the president signed a number of executive orders directly or indirectly relating to diversity, equity, and inclusion (DEI) programs in the federal government and private sector. The most significant order for non-government employers both repealed affirmative action requirements based on race and sex for government contractors and instructed his administration to take other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including “illegal” DEI practices. 

At the EEOC, Lucas has taken the president’s order to heart, citing “rooting out unlawful DEI-motived race and sex discrimination” as her first priority, and has taken what opportunities she has to act unilaterally as acting chair to move forward on preferred policies. Early in her tenure, she sent public “requests for information” to 20 large law firms, seeking detailed information about their alleged activities relating to DEI initiatives, and in February 2026, sent letters to the C-Suites of Fortune 500 companies “reminding” them of their non-discrimination obligations under Title VII.

In terms of guidance as to what constitutes “illegal” DEI, in March 2025, the EEOC, in conjunction with the U.S. Department of Justice (DOJ), issued “technical assistance” guidance documents “focused on educating the public about unlawful discrimination related to ‘diversity, equity, and inclusion’ (DEI) in the workplace.” The guidance stresses that Title VII does not provide any exception for DEI or “diversity interests” in prohibiting discrimination based on race, sex, or other protected category, and a general business interest in diversity or equity is insufficient to support basing any employment decision in whole or in part on a protected characteristic. It takes a very broad view of what may constitute “illegal” DEI in employment actions, ranging from hiring and promotion to compensation, benefits, access to training and other workplace opportunities such as mentorship programs, and employee resource groups (ERGs).

In 2026, we saw the EEOC bring a number of high-profile lawsuits alleging that an employer’s DEI policies were in violation of Title VII or resulted in unlawful discriminatory employment practices. Allegedly unlawful activities that have been challenged by the EEOC in court range from promotion decisions alleged to have been wrongly influenced by DEI considerations, to employee benefits and leadership opportunities that excluded male employees, to employer-provided anti-discrimination training that separated employees based on race. Equally important, the Commission has acted to aggressively enforce subpoenas seeking information about DEI practices from companies in federal courts, pressing companies to turn over voluminous information and, perhaps equally important, making the fact that the company is facing an investigation of its DEI activities a matter of public record. Such activities are expected to continue into 2027.

6. Employers Continue to Face Heightened Enforcement of Evolving Worksite Immigration Rules

The Immigration Reform and Control Act of 1986 (IRCA) established a fundamental element of immigration compliance by requiring employers to verify the work authorization of every new hire by means of proper completion of the Form I-9 document for employment eligibility verification. Over the years, this regulatory environment has experienced numerous changes across different administrations. The current administration has adopted an aggressive stance in enforcement measures with a significant increase in the number of audits, inspections, and raids across the nation. As a result, employers in various sectors—including manufacturing, hospitality, logistics, construction, staffing, and health care—have witnessed a significant rise in the frequency of audits and the severity of penalties. 

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Form I-9 Violations

Accurate completion of Form I-9s is essential to protect against civil and/or criminal penalties should a government-mandated Notice of Inspection or Audit occur. Form I-9 violations occur when an employer fails to properly complete, maintain, or update Form I-9, the employment eligibility verification form required for all employees hired in the United States. Common violations, which are either substantive or technical, include missing information, late completion of the form, failure to verify identity and work authorization documents, or inadequate recordkeeping. Employers found to be noncompliant may face civil penalties, government audits, and, in more serious cases, sanctions for knowingly employing unauthorized workers.

Reclassification of Form I-9 Violations

In March 2026, Immigration and Customs Enforcement (ICE) reclassified many Form I-9 violations from “technical” to “substantive.” Employers are therefore now confronted with an increased compliance burden. The practical impact of this recategorization is that certain “technical” mistakes that employers formerly could correct during a Form I-9 audit are no longer correctable and instead will now expose the employer to civil penalties even after the mistakes are cured during a Form I-9 audit. Industries such as construction, hospitality, manufacturing, agriculture, health care, staffing and food processing may face exposure because of workforce size, turnover rates, or prior enforcement focus.

Another noteworthy development under the new guidance is ICE’s emphasis on digital I-9s and remote verification procedures. As the use of electronic I-9s becomes more common among employers, ICE has concurrently become more vigilant to digital audit trails, system integrity, and the monitoring of third-party vendors. The new regulations may classify violations related to improper system configuration, insufficient record retention, or failure to keep audit logs as more serious offenses.

In light of the March 2026 framework, conducting internal audits has become critical for several reasons as employers can no longer rely on the assumption that certain mistakes can be cured after they are discovered during an audit. Accordingly, employers need to actively enhance their compliance programs to help reduce their risk of penalties in the event of a government-mandated Notice of Inspection.

Some measures include:

• Early detection of compliance gaps: Employers can conduct annual or semi-annual internal inspections of their Form I-9s for any compliance gaps such as incompleteness, missing signatures, date discrepancies, reverification issues and other deficiencies. This will help mitigate potential penalties by identifying issues before ICE does. 
• Review electronic I-9 systems: Internal audits must also include a review of electronic I-9 platforms to confirm that all applicable regulatory requirements, including audit trail/logs, vendor compliance functionality, electronic signature standards, record retention protocols, retrieval capabilities, and security safeguards are being followed. 
• Evaluate remote verification processes: Employers implementing alternative document review methods must confirm that all necessary steps are adhered to and accurately recorded on Form I-9.
• Strengthening organizational administration: By providing training to hiring staff, employers can create a skilled team that is well-versed in accurately completing the I-9 documents, thereby reducing the risk of potential violations that could lead to substantial fines.
• Update audit checklists to align with the newly established standards: Employers can take steps to update their audit tools to incorporate the redefined categories of violations and the requirements for digital verification. Furthermore, they can implement a systematic process to ensure that their audit tools are regularly updated in accordance with any new guidance, thereby guaranteeing the availability of current procedures and manuals for effective compliance.

In connection with the above, employers should diligently monitor the work authorization expirations of those employees who may be impacted by the dynamics of the humanitarian paroles and the Temporary Protected Status (TPS) terminations, redesignations, litigation, and related employment authorization documents (EAD). Considering the evolving nature of immigration policies and court decisions, employers now have an increased obligation to ensure that verification procedures are accurate and continue to closely monitor the EAD expiration dates. Implementing a consistent internal tracking system for Form I-9 reverification may help employers identify potential compliance issues proactively and reduce exposure to civil penalties and excessive scrutiny during government audits or enforcement actions.

Increased Caution Regarding Domestic Travel by Foreign National Employees

The current enforcement landscape has extended beyond the traditional workplace compliance domain with increased immigration enforcement activity and enhanced scrutiny by Customs and Border Protection (CBP) and ICE at transportation facilities including at airports and bus and train terminals. Foreign national employees may encounter additional questioning or requests for evidence of lawful immigration status while traveling within the United States. Thus, employers should work closely with immigration counsel before advising non-citizen employees on travel-related matters. As a precautionary measure, employers may also encourage foreign national employees to carry appropriate identification and immigration documentation evidencing their lawful status or employment authorization. These proactive steps can help ensure that employees are informed of potential travel-related risks and are better prepared to navigate the heightened enforcement environment.

In the current climate of aggressive enforcement, Internal I‑9 audits are not merely a defensive measure but a strategic investment in organizational viability. By redefining numerous previously correctable errors as substantive violations, ICE has significantly heightened the potential repercussions of common compliance errors. Thus, employers are urged to adopt proactive compliance to be able to navigate the complexities of the enhanced regulatory structure, mitigate legal and operational risks, and uphold the integrity of their workforce practices.

7. Legislation Advances to Protect Franchise Business Model

In the 2026 session of Congress, bipartisan legislation was advanced that would protect the franchise business model by narrowing the standard for determining joint-employer status (discussed in detail above) under both the Fair Labor Standards Act (which governs federal wage and hours law such as minimum wage and overtime) as well as the National Labor Relations Act (which covers union organization, collective bargaining, and secondary activity such as picketing) in the context of the franchise business model.

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The American Franchise Act (H.R. 5267/S. 3525) would adopt a more narrow and workable framework for determining when a franchisor may be deemed a joint employer of its franchisee’s employees under federal labor and employment law. Under the AFA, a franchisor would be considered a joint employer only if it exercised “substantial direct and immediate control” that has “a regular or continuous consequential effect” over the “essential terms and conditions of employment” of a franchisee’s employee. These terms of employment are expressly limited to include only wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction of work. Indirect control, the unexercised reserved contractual right of control, or immediate control exercised only on an isolated or sporadic basis would not be relevant to the joint-employer analysis. 

In recent years, the standard for joint employment broadly has changed numerous times under both the FLSA and the NLRA. The constant legal uncertainty occasioned by these changes has been of particular concern in the franchise context, given the specific control franchisors are required to exercise over their franchises as a condition of protecting their brands and trademarks under federal and state franchise laws. Some have attempted to use this legally required control under franchise law to establish joint employment under labor and employment laws.

On July 21, 2026, the U.S. Committee on Education and the Workforce reported the AFA favorably on a vote of 18-15, with all Republicans present voting for the bill and all Democrats present voting against it. This sets the table for full consideration in the U.S. House, which could come as early as the first week of September when the House reconvenes, although no firm schedule for the bill’s consideration has yet been set. The bill would then be in line for consideration in the U.S. Senate, where it includes the support of at least one Senator who caucuses with the Democrats. Employers utilizing the franchise business model are advised to keep abreast of relevant developments.

8. States Continue to Regulate AI in the Absence of Federal Action

At the federal level, there has been relatively limited action on measures to address and regulate AI. President Trump has issued a number of executive orders or “blueprints” relating to AI policy, largely focusing on rescinding Biden-era orders, attempting to limit state regulation of AI, and setting forth a “national policy framework” for artificial intelligence. To date, there has been little to no momentum in Congress to regulate AI, and given the narrow margins and political gridlock in Congress (as well as the upcoming midterm elections), it is unlikely a consensus on AI policy will emerge anytime soon. 

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One notable exception: during consideration of the “One Big Beautiful Bill” budget legislation of last year, the U.S. Senate voted 99-1 to strip language which would have imposed a ten-year moratorium on states’ enacting or enforcing state-level AI-related laws or regulations.

Given the lack of action on the federal level, many states have stepped into the gap with their own forms of AI regulation. A growing number of states have already enacted AI legislation. These range from narrowly focused requirements for certain types of AI tools to broader stand-alone comprehensive regulatory schemes. California, Colorado, Connecticut, Illinois, and Texas have all adopted far-reaching AI laws or regulations, as has the City of New York. Many more remain pending, as legislation to regulate AI in some form or fashion has been introduced in all 50 states. 

These developments suggest that now more than ever employers are advised to maintain situational awareness and closely monitor state (and municipal) actions relating to AI.

9. Absent Federal Action, States Continue the Expansion of Paid Family and Medical Leave Laws

The regulatory landscape for employee benefits in the United States is undergoing a profound structural shift. As gridlock prevents the implementation of a comprehensive, mandatory national paid leave program, state legislatures are aggressively establishing their own frameworks providing both paid and unpaid time off. For human resources professionals, policymakers, and government affairs personnel, this decentralized expansion demands a strategic shift from passive monitoring to proactive operational compliance.

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Recent Federal Inaction and Regulatory Fragmentation

At the federal level, the Family and Medical Leave Act (FMLA) of 1993 remains the baseline. However, the FMLA guarantees only unpaid, job-protected leave, and its strict eligibility and employer-size thresholds exclude nearly half of the private-sector workforce. With federal gridlock persisting, statutory momentum has shifted entirely to the state level. More than a dozen states and the District of Columbia have enacted mandatory state-sponsored Paid Family and Medical Leave (PFML) insurance programs. 

The compliance landscape is further complicated by the growing number of city and county employment ordinances that may intersect with federal and state leave provisions. While most paid family and medical leave programs are established at the state level, many municipalities have adopted their own paid sick leave, paid family leave, worker protection, and anti-discrimination requirements that provide greater benefits or protections than do state laws. Employers, particularly those with remote or geographically dispersed workforces, must therefore assess not only state leave obligations, but also applicable local ordinances that may affect leave eligibility, benefit coordination, notice requirements, and employee protections. Failure to account for these overlapping local requirements can create additional compliance risks.

Structural Variations Across State Frameworks

For policy architects and HR strategists, understanding the operational distinctions between state programs is critical. Current state PFML frameworks diverge significantly across four core categories:

• Funding and Premium Contributions: Jurisdictions utilize distinct financial models. States like California fund programs entirely via employee payroll deductions. Conversely, states like Washington, Massachusetts, and Colorado enforce cost-sharing models, splitting premium contributions between employers and employees based on organization size.
• Covered Leave Reasons: While all programs cover traditional parental bonding and serious medical conditions, newer statutes expand coverage to include such matters as prenatal leave, military exigency and "safe leave" for victims of domestic violence, stalking, or sexual assault.
• Expanded Definitions of "Family": Recent state legislation significantly broadens the legal definition of a family member. Traditional definitions limited caregiving leave to spouses, children, and parents. Newer state statutes extend coverage to siblings, grandparents, domestic partners, and individuals related by blood or “significant affinity.”
• Private Plan Opt-Outs: Most jurisdictions allow employers to bypass the state insurance fund by utilizing an approved private plan (e.g., self-insured or fully insured). However, these private options must match or exceed the state’s statutory benefit amounts, durations, and job protections, requiring rigorous administrative scrutiny.

Strategic Imperatives for HR and Government Affairs

The continuous rollout of state-mandated programs introduces significant operational hurdles, alongside several distinct long-term planning opportunities:

Operational Challenges

• Multi-State Compliance Overlap: Multi-state and multi-jurisdictional employers face an intricate web of differing notice requirements, benefit calculation methods, waiting periods, eligibility standards, and job-protection triggers. Tracking which state and local laws apply to remote and hybrid workers requires continuous payroll, human resources, and legal auditing.
• Coordination of Benefits: HR professionals must meticulously coordinate state PFML benefits with existing short-term disability insurance (STD), internal paid time off (PTO) policies, state mandated paid sick leave (PSL) and federal FMLA to prevent double-dipping or compliance failures.

Policy and Governance Opportunities

• Leveling the Playing Field: State-run social insurance funds enable small and mid-sized employers to offer competitive leave packages that would otherwise be cost-prohibitive, aiding in talent attraction and retention. 
• Data-Driven Policy Advocacy: For government affairs personnel, tracking the quantitative outcomes of mature state programs, such as long-term impacts on business operations and noticeable improvements in employee retention, provides vital data to guide future corporate benefit design and legislative lobbying on further refinements.

Looking Ahead

The momentum behind state-level PFML continues to accelerate. As public expectations shift, paid family and medical leave is transitioning from a premium corporate perk to a baseline regulatory standard. Until a unified federal framework bridges these legislative gaps, HR executives and policy experts must maintain an agile infrastructure, ensuring continuous policy adaptation to remain compliant and competitive.

10. Events at the ILO Complicate the Compliance Picture for Multinational Firms

International labor and employment law is changing fast. Two major developments, both involving the International Labour Organization (ILO), threaten to complicate international compliance significantly. Both developments were years in the making. First, the ILO adopted a “convention” on platform work, which layers a series of rights and obligations on the digital workplace. Second, the International Court of Justice (ICJ) interpreted a different ILO convention, which recognizes the freedom of association, to include the right to strike. Both developments have already been interpreted broadly by labor advocates, who are urging governments to read them as broadly as possible. As a result, they could complicate the international picture and pose new challenges for multinational firms.

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New Rules for Platform Work

The platform-worker convention kicked off in 2023, when the ILO’s Governing Body announced that it would consider a new convention for work on digital platforms—the Decent Work in the Platform Economy Convention. It applies to “digital labour platforms,” which are defined to be a legal or natural person which, “through digital technologies … organizes and/or facilitates work … upon request of the recipient … regardless of whether that work is performed online or in a specific geographic location.” 

After three years of negotiations, the ILO approved a final convention by vote of 406 to 8, with 38 abstentions. Among the countries voting “no” was the United States. The final convention reflects a compromise between competing demands. 

While some had pushed to reclassify platform workers as employees, others defended their existing flexible arrangements. The convention takes neither position. Instead, it simply directs governments to make sure that platform workers are properly classified under national law.

The convention does, however, expand workers’ rights in other ways. It states that platform workers have certain fundamental rights, including the right to free association. It also directs governments to make sure that platform workers are paid at least the applicable minimum wage. And it puts limits on “algorithmic management,” requiring companies to include human review for decisions affecting a worker’s job or pay.

Freedom to Associate and the Right to Strike

The ICJ decision is even longer in the making. It started in 2012, when the ILO Governing Body split over the meaning of ILO Convention 87. Broadly speaking, that convention guarantees the “freedom of association.” And while it never mentions strikes, the ILO’s worker members have long argued that the freedom of association includes, at least implicitly, a right to strike. 

By contrast, the employer members have maintained that the convention included no such right. They have pointed out that the right to strike is complicated and contested. If the convention’s drafters had meant to include it, they would have said so explicitly. 

The dispute eventually became so heated that the Governing Body deadlocked for more than a decade. To break the impasse, the Governing Body decided to submit the question to the ICJ. 

In a cautious, 43-page opinion, the ICJ sided with the former view. It agreed that the freedom of association implicitly includes the right to strike: if workers can’t strike, they can’t band together to improve their working conditions. The ICJ also noted that while the convention says nothing about strikes, it does mention union “activities,” which commonly include strikes.

The ICJ’s opinion, however, was limited. While it found a right to strike, it declined to say anything about that right’s content. It also merely offered an advisory view. It did not determine any enforceable legal right; it only interpreted a longstanding convention. It remains for individual countries to choose whether to ratify the convention or accept the ICJ’s view.

An Evolving Picture

On their face, neither development immediately changed the status quo. The ICJ decision was advisory only, and the platform-worker convention still must be ratified by individual countries. But already, advocates are calling for both to be interpreted broadly. Even though the platform-worker convention deliberately avoided weighing in on worker classification, advocates are already arguing that it implicitly requires the workers to be employees. And while the ICJ decision says nothing about what the right to strike includes, advocates have already claimed that it includes a ban on permanently replacing striking workers. (Under U.S. labor law, an employer may permanently replace workers who strike for economic reasons.)

Both events, then, may evolve in the coming months and years. Multinational employers will have to stay alert to how they are interpreted in individual countries. Their impact on international law could be significant and hard to predict.

Conclusion 

The above administrative, legislative, and regulatory changes and trends will continue to shape the workplace over the coming year. Stay tuned for WPI’s post-midterm election analysis to see how the world of work may further evolve at the federal and local levels.