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Last year was a defining one for US employment law, labour relations and workforce management. In 2025, shifting federal priorities and expanding state and local employment laws reshaped compliance expectations for US employers nationwide. Below, we countdown the top five trends that defined 2025 and explore how they are likely to influence employers' strategies in 2026.
As 2025 came to a close, our US law firm asked their attorneys what issues were top of mind for their nationwide clients. The results of this informal survey provide an opportunity not only to reflect on the challenges confronted by global organisations, but also to prepare for what the legal landscape might hold in 2026. What follows is a snapshot of those pressures, and the themes and issues that employers should continue to watch closely and prepare for in the coming months ahead.
Number five - Artificial Intelligence
AI is now widely embedded across industries. Some are using it to their own (or, worse, their clients') detriment. The President promotes it. Some states (California, Colorado, Illinois, New York, and Texas) are trying to regulate its use. It has implications for creators (copyright), researchers (patents), corporations (trademarks), employers (efficiencies, skill-shifting, and new risks), all complicated further by cybersecurity challenges. Whether state regulation of AI will be pre-empted by national policy remains to be seen, but it is clear: Pandora's box is open and what will happen next or in the near future remains a lingering question.
Takeaway for 2026
The year ended with unresolved jostling over authority over AI regulation, but state and local laws remain in effect. Active monitoring of legal developments related to AI is a must for organisations in 2026.
Number four - Reductions in Force (RIFs)
Is AI a contributor to the uptick in RIFs? Is it the economy? Whatever has driven the re-balancing at many companies, employers have been busy with Worker Adjustment and Retraining Notification Act (WARN) notices and separation agreements that comply with both federal and relevant state laws, disparate impact analyses, and providing general guidance for clients in contraction mode.
Takeaway for 2026
Many states have notice and reporting requirements for employers that conduct mass layoffs that are more stringent and affect smaller companies than those covered by federal law, and those jurisdictions also tend to have employee-friendly laws related to potential claims related to terminations. Employers that must reduce their workforce should be strategic in executing layoffs.
While the federal government has questioned the propriety of disparate impact as a basis for liability in discrimination laws, some states have responded by codifying the concept within their anti-discrimination laws.
Number three - Diversity, Equity and Inclusion (DEI)
What has been promoted for a generation as a lofty and ultimately profitable endeavour was turned on its head last year with government pronouncements of DEI as illegal and discriminatory, that disparate impact is unconstitutional, and that a focus on identity (including those who have been traditionally identified as under-represented and marginalised) over merit creates victims of "anti-American" discrimination. The pushback opposing a social construct that evolved out of the Civil Rights movement over the ensuing half-century has shocked the world's employment eco-system, with some employers facing investigations and many others seeking counsel to avoid unwanted scrutiny. With a newly empanelled Equal Employment Opportunity Commission (EEOC) and the US Department of Justice's recent actions, including its Civil Rights Fraud Initiative and revision of civil rights regulations, it's clear that this issue will continue to be a priority in 2026.
Takeaway for 2026
Employers that have not yet assessed their human resources management policies and practices through the EEOC's critical lens should weigh risks against intentions. Any discrimination, harassment or retaliation charge – including those claiming "reverse" discrimination based on DEI – is best handled by experienced counsel.
Number two - Restrictive covenants
Yes, the Federal Trade Commission (FTC) ban on non-compete post-employment restrictions died last year. But the FTC is not leaving the issue entirely. More significantly, many states continue to add robust laws further limiting what an employer and employee can agree to, whether at the outset or the conclusion of employment, or at any time in between. What is enforceable anymore, and what are clever and legal ways to protect an employer's legitimate interests? What if an entire group is separating as a team? Are non-disclosure agreements plausible at all anymore, and how do the rules vary from state to state? These and many related questions remain a challenge and will continue to do so.
Takeaway for 2026
Stay tuned in 2026 to see what the FTC presents regarding non-competes and employee mobility. The new mayor in New York City is vowing to ban non-compete restrictions and void existing agreements. Meanwhile, many employers must revisit their existing agreements and templates for future contracts to examine their legality in light of new laws recently effectuated across the nation.
Number one - Leave laws
Ever-changing laws require employers to give workers time off for myriad reasons: paid sick leave, paid or unpaid family medical leave, leave for domestic violence, crime victim leave, voting leave, jury duty leave, military leave, military family leave, military funeral honours leave, prenatal leave, blood donation leave, bone marrow donation leave, organ donation leave, small necessities leave, parental leave, parent-teacher conference leave, bereavement leave, child bereavement leave. It is complicated.
Takeaway for 2026
The patchwork of laws mandating and regulating time off for employees gets increasingly complex from year to year, and this can be especially tricky for employers with a remote workforce, since some jurisdictions cover any employer with even just one employee located in their city/state. Employers should remain abreast of the applicable laws wherever they have employees, and might consider whether a single, organisation-wide policy is pragmatic.
Takeaway for employers
Taken together, the issues that defined 2025 point to a more fragmented, fast-moving and risk-sensitive employment law environment in the US. With reduced federal oversight in some areas yet intense scrutiny from new angles in others, plus heightened state and local activity in many locations, employers are increasingly required to navigate overlapping and sometimes conflicting obligations, while responding to rapid change driven by technology, workforce expectations and political scrutiny.
In 2026, these themes are still relevant and expected to continue to influence employer strategies. Employers that approach 2026 with clarity, flexibility and, where needed, expert legal advice, will be best positioned to manage both risk and opportunity in an increasingly complex employment landscape.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
