US Employment Law Trends to Watch in 2026

As we all return from the holiday season, hopefully rested and ready for 2026, UK employers will soon start to prepare for upcoming changes enacted by the Employment Rights Act, the first of which are set to become effective in April 2026 and which, collectively, amount to the most significant enhancement of UK employee rights in decades. You can read more about how to prepare for these changes here. While the passage of the act has finally provided some direction in the UK, what about UK companies with employees in the United States? Will 2026 bring similar changes to employment laws in the US?

Unsurprisingly, the answer is almost certainly “no.” The United States has not passed significant federal employment legislation in recent memory, and we do not expect 2026 to be any different. Rather, most recent US employment laws have been enacted at the state level, and signs point for the trend to continue into 2026. Here is what may be in store for UK employers with US employees in 2026.

2025 was momentous, to say the least, as UK employers expanding operations into the United States contended with the new administration’s policy priorities, including related to tariffs and immigration. We expect the federal government to continue with some of the employment related efforts it began in 2025, such as the following:

• Federal agencies will likely continue their focus on what they perceive to be unlawful DEI programs, such as employee affinity groups that restrict membership or overt preferences for employees with protected characteristics. This will be most impactful for UK companies seeking federal contracts or grants. See my prior blog on this here: Best Practices for Maintaining DEI Programs in the US;
• There will likely be continued focus on tightening immigration, potentially making it more difficult for UK employers to obtain visas to send employees to the US; and

There is proposed federal legislation to reform a law from the 1930s which could make it harder for employees to form unions.

Multi-state employers, such as those with a fully remote workforce, must continue to manage the employment law differences between states, which show no signs of slowing. We expect the following state-level trends to continue:

• Currently, almost half of the states, including California and New York, require provision of some amount of protected sick leave for employees. Unhelpfully, however, each state often has differing rules with respect to accrual rates, payment, and whether unused sick leave is forfeited at year end or upon dismissal. UK employers should regularly confirm their knowledge of the rules in states in which they have employees as those rules change with frequency;
• Less common than paid sick leave laws are pay transparency laws in which a handful of states, again including California and New York, require that job postings contain salary ranges, which is seen as an effort to combat discriminatory pay disparities. It is possible additional states will join this effort in 2026; and
• There may continue to be legislative efforts in some states to either expand or restrict protections for transgender employees, such as related to bathroom access. Restrictions at the state level, however, may run afoul of existing federal Supreme Court precedent protecting transgender employees from discrimination. As in the UK, this continues to be an area of legal conflict.

As AI continues to evolve in the workplace, some US states have begun to enact legislation expanding liability for discriminatory results of AI aided employment decisions. For example, California recently finalized regulations clarifying the circumstances under which automated decision making can violate existing discrimination laws, and Colorado has passed a comprehensive new law, currently set to take effect in June 2026, imposing responsibilities on AI developers to take reasonable care to avoid algorithmic discrimination and on AI users (including employers) to establish processes to manage AI related discrimination risks. Other states may follow suit in 2026.

In contrast, the federal government’s stated position is to focus its efforts on advancement of the US’s role in AI development and leadership, moving away from the Biden era’s priority on ethical use of AI. In fact, in one of President Trump’s 2025 executive orders related to DEI, he ordered that facially neutral policies or practices (such the use of AI to assist employment decisions) that disproportionately impact those with protected characteristics should no longer be pursued by the federal government as unlawful discrimination. We expect 2026 to continue this tension between federal and some states’ priorities over the impact of AI in the workplace.

Even without further federal or state legislation, however, utilizing AI in the US to assist in employment decisions involves some risk of discrimination claims. For example, does your AI recruitment tool recommend candidates to you based on prior hires? If your prior hires happened to be all of one gender, is there a risk the AI tool will limit its recommendations moving forward to fit that profile? In the US, where discrimination cases are often decided by juries and can result in very high awards to claimants, it will be important for employers to be fully aware of how their AI tool operates to manage any such unintended risks.

One thing we can say about HR and employment laws, in both the US and the UK, is that there are seldom dull moments, and 2026 promises to fulfil that truism. Please do not hesitate to reach out to the lawyers at MBM for any UK or US employment law questions you have. We would be delighted to assist you in navigating the opportunities and challenges 2026 is sure to bring.