The Shifting Employment Law Landscape
Employment law rarely stands still — and 2026 has brought a wave of regulatory changes that affect businesses of every size. From updated overtime thresholds to expanded protections for remote workers, employers who rely on outdated policies are increasingly exposed to liability.
For employees, these changes mean stronger rights and more avenues for recourse. For employers, they mean updated handbooks, revised classification practices, and renewed attention to wage and hour compliance.
Key Federal Developments
Overtime Threshold Adjustments
The Department of Labor has continued to revise the salary threshold below which workers must receive overtime pay. Employers who have not audited their exempt employee classifications risk significant back-pay liability. If an employee is classified as salaried-exempt but earns below the current threshold, they may be entitled to overtime for every hour worked beyond 40 per week.
Non-Compete Restrictions
The FTC's ongoing push to limit non-compete agreements continues to ripple through employment contracts. Many standard non-compete clauses — particularly those applying to lower-wage workers — may no longer be enforceable. Employers relying on these agreements to protect trade secrets should pivot to narrowly tailored non-disclosure and non-solicitation agreements instead.
Independent Contractor Classification
The multi-factor test for determining worker classification has been further refined. Businesses that rely heavily on gig workers or contract labor should undertake a fresh classification analysis. Misclassification — treating employees as contractors to avoid benefits and tax obligations — carries steep penalties including back taxes, fines, and private lawsuits.
An employment law audit is not just defensive — it often reveals operational efficiencies. Many businesses discover redundant policies, outdated job descriptions, and missing documentation that fixing saves more money than it costs.
State-Level Changes Worth Watching
State legislatures have moved aggressively on several employment fronts where federal law has stalled:
- Pay transparency: An expanding list of states now require employers to disclose salary ranges in job postings and, in some cases, to current employees upon request
- Predictive scheduling: Several states require advance notice of shifts for hourly workers, with premium pay for last-minute schedule changes
- Bereavement leave: Paid bereavement leave mandates have passed in multiple states, expanding beyond the immediate family definitions most employers currently use
- Remote work expenses: Some states require employers to reimburse employees for home-office expenses, including internet subsidies
What Employers Should Do Now
- Audit exempt employee classifications against current federal and state thresholds
- Review and update non-compete, NDA, and non-solicitation agreements with counsel
- Conduct a contractor vs. employee classification analysis for all 1099 workers
- Update your employee handbook to reflect current leave policies, pay transparency obligations, and expense reimbursement rules
- Train managers on updated interview guidelines, including restrictions on salary history inquiries
What Employees Should Know
If you believe your employer has misclassified you, withheld overtime, or violated state leave laws, you have legal options. Many employment claims carry fee-shifting provisions — meaning if you prevail, your employer may be required to pay your attorney's fees. Speaking with an employment attorney for an initial consultation is often worth the time even when the outcome is uncertain.
Testing Company's employment law practice advises both employers building compliant workplaces and employees navigating disputes. Contact us for a confidential consultation.