Employment laws are constantly changing, making compliance an ongoing challenge for employers. This blog post provides an overview of what employers need to know to help keep their organizations compliant in 2026 and beyond.
The DOL’s Independent Contractor Rule
The U.S. Department of Labor’s (DOL) current independent contractor rule uses an “economic reality test” (ERT) to determine whether a worker is an employee or independent contractor under the Fair Labor Standards Act (FLSA). The ERT weighs six factors:
- The degree of control the employer has over how the work is done;
- The worker’s opportunity for profit or loss;
- The skill and initiative required for the work;
- The permanence of the working relationship;
- The worker’s investment in equipment or materials required for the task; and
- The extent to which the service rendered is an integral part of the employer’s business.
The DOL published a proposed rule on Feb. 27, 2026, that would rescind the current rule and replace it with a standard similar to the one that was in effect in 2021. The proposed rule emphases two core ERT factors: the employer’s control and opportunity for profit or loss. The proposed rule is more business-friendly and, according to the DOL, it would increase the number of independent contractors in the United States.
- Best practices that employers can implement to prepare for the proposed rule include:
- Review all worker relationships to determine whether classification is defensible under the ERT.
- Document the factors supporting independent contractor status for each such relationship.
- Monitor the proposed rule’s progress and be prepared to adjust classifications if it is finalized.
- Consult legal counsel before reclassifying workers, as misclassification carries significant liability.
Joint Employment
When a joint-employer relationship exists, an employee of one employer may be deemed employed by another employer, subjecting the second employer to the same legal obligations as the first.
The NLRB’s Joint Employer Rule
As of February 27, 2026, the National Labor Relations Board (NLRB) applies a “substantial direct and immediate control” standard to determine joint-employer status. Control must be regular or continuous and must affect essential terms of employment (e.g., wages, benefits, hours, hiring, discharge, discipline or supervision). Indirect control or a contractual right to control, even if never exercised, may be considered but does not alone establish joint-employer status.
- Best practices that employers can implement to help them comply with the NLRB’s joint employer rule include:
- Review existing contractual arrangements with staffing agencies and vendors.
- Evaluate operational practices that could be interpreted as exercising direct control over another entity’s workforce.
- Train managers who interact with contract or staffing-agency personnel to avoid inadvertently exercising direct control over hiring, discipline, scheduling or supervision.
The DOL’s Proposed Joint Employer Rule
On April 23, 2026, the DOL proposed a rule addressing joint-employer status under the FLSA, the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).
The rule establishes distinct standards for determining joint-employer status in vertical (i.e., an employee is jointly employed by two or more employers that simultaneously benefit from the worker’s work) and horizontal (i.e., an employee works separate hours in the same workweek for two or more sufficiently associated employers) scenarios.
Under the proposed rule, a joint-employer finding could trigger overlapping wage, leave and agricultural worker obligations. The public comment period closes June 22, 2026.
Best practices that employers can implement to prepare for the DOL’s joint employer rule include the following:
- Audit existing relationships and operational practices.
- Review contracts, franchise agreements and vendor agreements.
- Assess FMLA and MSPA coverage implications if a joint-employer relationship exists.
- Become familiar with state and local jurisdictional rules.
- Consider submitting a public comment on the DOL’s proposed rule.
Reverse Discrimination
Reverse discrimination is discrimination against the majority, rather than the minority. Previously, courts disagreed as to the appropriate evidentiary standard in reverse discrimination cases. Some courts required more evidence for allegations of reverse discrimination than for traditional discrimination claims.
In a unanimous Supreme Court ruling issued on June 5, 2025 in Ames v. Ohio Dep’t of Youth Services, the Supreme Court rejected the heightened evidentiary standard in reverse discrimination cases under Title VII of the Civil Rights Act of 1964 (Title VII). All Title VII discrimination cases are subject to the same standard, regardless of whether the plaintiff is a member of a majority or minority group.
While the Supreme Court’s ruling does not impose new obligations on employers, it establishes a uniform standard for individuals alleging any claim of employment discrimination, including reverse discrimination. Thus, it will be easier for individuals to allege reverse discrimination, and there may be an increase in the volume of such claims.
Best practices that employers can implement to aid compliance include the following:
- Audit policies and procedures;
- Train relevant personnel, including HR;
- Consider state and local laws; and
- Monitor for updates.
- Significant liability.
Pay Transparency
Pay transparency laws require covered employers to disclose certain information regarding employee compensation in job postings for open positions, amid promotions and transfers, and upon request from existing staff. The information to disclose includes, namely, salary ranges and benefits packages.
The United States has seen a rapid expansion of these laws over the past few years, with an increasing number of jurisdictions implementing them. Pay transparency laws vary by state. Employers generally must comply with the laws in any jurisdiction where their employees work. Thus, employers operating in multiple states and/or with remote employees stationed across the country may face a patchwork of legal requirements.
General requirements of these laws include the following:
- Salary and benefits disclosures;
- Retaliation protections;
- Salary history bans; and
- Pay reporting.
Best practices that employers can implement to aid compliance include the following:
- Establish a methodology for determining compensation ranges;
- Train appropriate parties (e.g., HR and recruiting personnel);
- Review job postings and conduct an audit to identify and remedy any pay disparities; and
- Update policies and monitor for further updates.
Noncompete Agreements
A noncompete clause prevents a worker from joining a competitor or starting a competing business, typically for a set period and within a defined geographic area. Currently, state law governs the enforceability of noncompete agreements.
In recent years, state restrictions on noncompete agreements have become increasingly popular. State restrictions on noncompete agreements generally fall into four broad categories:
- Near total bans;
- Restrictions for low-wage or other specified workers;
- Restrictions limited to certain professions; and
- Permitted if specific requirements are met.
Several states have added new restrictions in 2026, including Utah, Virginia and Tennessee. In 2027, virtually all noncompete agreements for employees and independent contractors will be banned in Washington.
Best practices that employers can implement to comply with state noncompete laws include:
- Audit existing noncompete agreements and policies to confirm they comply with applicable state law.
- Update agreements that no longer meet current legal requirements, particularly in states with recent legislative changes.
- Consider alternatives to noncompetes (e.g, nondisclosure or nonsolicitation agreements) where noncompetes are restricted or banned.
- Prioritize employee retention strategies as an alternative to relying on restrictive covenants.
Diving Deeper
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