Key Highlights On April 22, 2026, Virginia approved a statewide paid family and medical leave (PFML) program, joining several other states across the nation that have enacted such programs. The new program will be administered by the Virginia Employment Commission (VEC), funded through payroll contributions beginning April 1, 2028, and will begin paying benefits on December 1, 2028. For Virginia employers, the larger story may be that this is not simply federal Family and Medical Leave Act (FMLA) with wage replacement added. Virginia’s PFML program differs from its federal counterpart in who is covered, which relationships and reasons qualify, how benefits are funded, and when job-restoration rights attach. Virginia’s New PFML Program Creates a Separate State Leave Framework The new law establishes a state-administered insurance program through the VEC. Under the statute, the VEC must establish and administer the program by January 1, 2028, begin collecting contributions on April 1, 2028, and begin receiving claims and paying benefits on December 1, 2028. The law also permits employers to apply to satisfy their obligations through an approved private plan if that plan provides benefits equal to or greater than those required by the statute. As enacted, Virginia PFML will provide up to 12 weeks of paid leave in a benefit year for the birth, adoption, or foster placement of a child, the employee’s own serious health condition, care for a family member with a serious health condition, qualifying military family needs, and care for a covered service member. The law also provides up to four weeks of paid leave to seek defined “safety services” for the employee or a family member. Weekly benefits are set at 80% of average weekly wages, subject to a statutory minimum and maximum, and the law expressly allows intermittent or reduced-schedule leave. PFML leave that also qualifies as leave under the FMLA runs concurrently with FMLA leave, so the employee receives only a total of 12 weeks per year for leave qualifying under both laws. The PFML statute allows employers to require that PFML be used concurrently with any “disability or family care leave” the employer provides, but it is unclear whether this would permit the employer to require the employee to use PFML concurrently with PTO or general paid sick leave, as is commonly required under employer leave policies. Virginia Joins Other States in Expanding Its PFML Program Beyond FMLA Because Virginia historically has not imposed paid leave obligations on private employers, the familiar statutory reference point for Virginia employers has been the federal FMLA. Virginia’s new program, however, does not just mirror the federal scheme; instead, it goes well beyond FMLA’s leave entitlements. 1. Virginia PFML Reaches a Broader Pool of Workers than FMLA FMLA coverage applies to private employers with 50 or more employees and only to employees who have worked for the employer for at least 12 months, worked at least 1,250 hours in the prior 12 months, and work at a site with 50 employees within 75 miles. Virginia officials, by contrast, describe the new PFML benefit as being widely available to nearly all workers in the Commonwealth, and the statute itself makes benefits available to “covered individual[s]” which generally means a worker who satisfies Virginia’s unemployment-law monetary eligibility criteria. On the employer side, the statute also borrows from Virginia’s unemployment-law, which generally reaches an employing unit that paid $1,500 or more in wages in a calendar quarter or had at least one individual in employment for part of a day in each of 20 different weeks in the current or preceding year. These unemployment benefit thresholds for employee and employer coverage are extremely minimal and will be met by the vast majority of employees and employers. 2. Virginia’s Covered Relationships and Qualifying Reasons also Exceed Those Under FMLA The new Virginia PFML law also provides more reasons for employees to take leave than federal FMLA. PFML not only covers the FMLA-qualifying reasons, but adds a new category of “safety services” related to domestic violence, harassment, sexual assault, or stalking for which an employee can take extended paid leave. In addition, while FMLA allows employees to take leave to care for only very close relatives (a child, parent, or spouse), PFML expands the leave entitlement to allow extended paid leave for an employee to care for more attenuated relations. 3. Unlike Many Other States Virginia Merges Benefit Eligibility and Job Protection One critical way in which Virginia PFML is broader than both FMLA and other state PFL laws is in its provision of job protection. In most states with similar PFL laws, paid leave and job protection are separated to balance employer and employee interests. An employee might be entitled to paid leave under the broader state program but is only entitled to restoration to their position if they meet FMLA’s requirements for tenure, employer size, etc…, or fit within the requirements of other specific laws like the Americans with Disabilities Act, Pregnant Workers Fairness Act, or state analogues. Virginia PFML, on the other hand, provides job protection and restoration rights for all employees who meet the relatively short 120-day tenure requirement with their current employer before taking leave. Why This Matters Virginia PFML adds more than a new leave right. It also adds a new payroll tax, notice requirements, and administrative system. Although employers have a two (2) year lead time before PFML begins to actively operate, the time will soon come for employers to review their leave policies to ensure that PFML leave is coordinated to work alongside the employer’s other leave requirements, and that all leave policies are in line with the new law’s requirements. Employers can consult their Polsinelli Labor and Employment attorney with any questions.

Key Highlights Effective April 18, 2026, New York State now generally prohibits employers from requesting or using consumer credit history for employment purposes, subject to limited statutory exemptions. The statute defines “consumer credit history” broadly enough to reach credit reports, credit scores and certain information obtained directly from an applicant or employee. New York City employers remain subject to the City’s more protective local regime because the state law expressly preserves local laws that afford greater protection. What Changed on April 18, 2026? New York employers face a significant statewide change in recruiting and other employment decision-making practices. Effective April 18, 2026, amendments to New York’s Fair Credit Reporting Act now make it an unlawful discriminatory practice for employers, labor organizations, employment agencies and their agents to request or use the consumer credit history of an applicant or employee for employment purposes, or otherwise discriminate on that basis with respect to hiring, compensation or the terms, conditions or privileges of employment. The statute also changes what may be furnished for employment purposes by requiring employment reports to exclude information bearing on a person’s creditworthiness, credit standing, credit capacity or credit history unless an exemption applies. 1. The law reaches more than hiring. The new restriction is not limited to pre-employment screening. Under the statute, “employment purposes” includes evaluating an individual for employment, promotion, reassignment or retention, and the operative ban also reaches compensation and other terms, conditions and privileges of employment. For employers that have historically used credit information in internal mobility or role-based screening, that broader reach is particularly notable. 2. “Consumer credit history” is defined broadly. The law does not target only traditional credit reports. It also covers credit scores and information obtained directly from the individual about credit accounts, late or missed payments, charged-off debt, collections, credit limits, prior inquiries, bankruptcies, judgments or liens. In practical terms, the definition reaches not only vendor-supplied reports, but also certain questions directed to applicants or employees themselves. 3. The exemptions are narrow and role-specific. The statute contains a limited set of exemptions, including roles where use of credit history is required by state or federal law or by a self-regulatory organization; peace and police officers and certain law-enforcement roles; positions subject to background investigation by a state agency; positions requiring bonding or security clearance; certain non-clerical roles with regular access to trade secrets, intelligence information or national security information; positions with signatory or fiduciary authority over at least $10,000; and positions with regular duties that allow the employee to modify digital security systems designed to prevent unauthorized access to networks or databases. 4. New York City employers still have an added compliance layer. The statewide law expressly preserves local laws that provide greater protection, which leaves New York City employers with an additional layer of compliance. City guidance continues to construe exemptions narrowly, notes that the City law applies when an employer has four or more employees or one or more domestic workers and contemplates notice and five-year recordkeeping when an employer invokes an exemption. That same guidance also describes the $10,000 funds exemption and the digital-security exemption as generally executive-level, rather than blanket exemptions for finance or IT roles. Why This Matters By extending New York City’s existing credit-check restrictions statewide, the NYFCRA expands the issues that can arise in recruiting, background-check administration and role-based exemption analysis. The April 18 effective date places renewed attention on application materials, interview practices, vendor instructions and exemption analyses—particularly in New York City, where the local law continues to add its own notice, recordkeeping and interpretive overlay. This law also joins New York State’s Article 23-A framework and New York City’s Fair Chance Act as another highly granular regulation of the pre-hire and onboarding process. Employers should review their onboarding and recruiting processes to ensure compliance with the Empire State’s increasingly technical hiring requirements and consult their Polsinelli Labor and Employment attorney with any questions.

Key Highlights The Equal Employment Opportunity Commission has held Title VII permits federal agencies to maintain single-sex bathrooms/locker rooms and exclude transgender employees from opposite-sex facilities. While the decision applies only to the federal sector, it provides a roadmap for how the EEOC may analyze bathroom/locker room issues post-Bostock. Six years after the Supreme Court’s 2020 decision in Bostock v. Clayton County reshaped Title VII, the EEOC has addressed an unanswered question from that decision: whether Title VII requires a federal agency to allow a transgender employee to use bathrooms and locker rooms consistent with the employee’s gender identity. Selina S. v. Daniel Driscoll, Secretary, Department of the Army, EEOC Appeal No. 2025003976 (Feb. 26, 2026). Inside the EEOC’s Holding The case involves a civilian employed by the U.S. Army who had used male-designated restrooms and locker rooms without issue. In 2025, the complainant informed management that he identified as a woman and requested access to female-designated facilities. The agency denied the request based on guidance requiring sex-based designation of “intimate spaces.” The EEOC framed the appeal as presenting an issue not “authoritatively addressed” — whether Title VII’s prohibition on discrimination “because of sex” extends to access to sex-designated bathrooms and locker rooms. The analysis relied heavily on Bostock, which held that firing (or refusing to hire) someone “simply for being . . . transgender” is discrimination “because of . . . sex” under Title VII. Bostock, however, left open the question of access to “bathrooms, locker rooms, or anything else of the kind.” Using that framing, the EEOC treated restroom and locker room access as a distinct issue. The EEOC concluded that Title VII permits federal agencies to maintain single-sex bathrooms and similar intimate spaces and to exclude employees from opposite-sex facilities. Exclusion from intimate spaces by itself, the Commission clarified, does not state a plausible Title VII claim. Applying what it characterized as an “equal treatment” approach, the EEOC reasoned that a policy separating bathrooms by biological sex does not constitute unlawful discrimination if applied equally to all employees, regardless of transgender status. According to the majority, men and women are not similarly situated in intimate spaces, and sex-based separation in those contexts reflects privacy interests and biological distinctions rather than discriminatory animus. Given the decision arises in the federal administrative context, judicial review is possible. Federal courts are not required to adopt the EEOC’s interpretation. We anticipate continued litigation in this area is likely, given Bostock’s unsettled scope. Why This Matters While the decision does not apply to private-sector employers, it provides insight into how the EEOC may approach facility-access claims. The decision distinguishes between adverse employment actions based on transgender status — squarely addressed in Bostock— and access to sex-designated intimate spaces, which Bostock did not resolve. Additionally, the ruling does not provide a safe harbor for employers’ decisions concerning employees’ access to intimate spaces. Federal courts remain divided on Bostock’s reach, and many state and local laws expressly require that employees be permitted to access facilities consistent with their gender identity. Employers operating across jurisdictions might consider evaluating whether a uniform nationwide policy creates compliance risk in particular states or municipalities. Workplace safety guidance and other regulatory considerations may also intersect with facility-access policies. For federal contractors and subcontractors, the practical impact may be more immediate. Contractors often operate on federal property and alongside federal employees. Contractors operating on federal property may face operational and employee-relations challenges if agency rules governing facility access differ from internal policies. Contractors might consider reviewing site-specific access protocols, assessing alignment between employee handbooks and federal worksite rules and reviewing supervisor training on addressing related employee concerns. Looking Ahead The contours of Title VII’s application to bathroom and locker room access remain unsettled. Continued litigation is likely, and further judicial clarification may follow. Polsinelli attorneys will continue to monitor developments in light of evolving federal, state and local requirements. Employers with questions about the EEOC’s decision or compliance considerations should consult their Polsinelli Labor and Employment attorney.

Key Highlights PAGA reforms elevate the importance of proactive compliance: The 2024 amendments reallocate penalties, expand cure opportunities, and give courts more discretion to reduce penalties for good-faith errors—making prompt remediation and well-documented compliance efforts critical in 2026. Wage-and-hour fundamentals continue to drive exposure: Daily overtime rules, regular rate calculations, evolving minimum wage requirements and strict meal and rest period obligations remain the primary sources of liability despite PAGA changes. Operational gaps can create outsized risk: Payroll misconfigurations, off-the-clock work, missed break premiums and delayed final pay can quickly compound across employees and pay periods, leading to significant penalties and litigation risk. California’s wage-and-hour framework is one of the nation’s most complex and vigorously enforced. In 2024, the California legislature enacted significant reforms to the Private Attorneys General Act (PAGA) affecting civil penalties allocations, employers’ ability to cure certain violations and PAGA case management. Those reforms took effect in 2025 and continue to influence statewide risk exposure in 2026. The PAGA Context: Reforms That Matter in 2026 PAGA deputizes employees to pursue civil penalties on behalf of the State of California and other employees for Labor Code violations. Historically, employers faced large PAGA penalties because: PAGA actions do not require class certification; Penalties could accumulate per employee, per pay period; and Procedural requirements and enforcement timing often created settlement pressure. The 2024 reforms recalibrated several parts of this framework as they: Reallocated civil penalties so that 65% now goes to California’s Labor and Workforce Development Agency and 35% to aggrieved employees (subject to certain adjustments); Expanded cure opportunities to give employers the chance to fix certain violations within defined windows and limit penalty exposure; and Adjusted penalty structures to give courts clearer guidance to reduce penalties for isolated and good-faith errors while preserving high penalties for persistent or bad-faith violations. The PAGA reforms might seem procedural. But in practice, they highlight how documented compliance efforts, rapid remediation and coordinated cross-functional responses to notices carry strategic importance for California employers. Wage-and-Hour Fundamentals That Still Drive Risk Even following the PAGA reform, the underlying wage-and-hour requirements of the California Labor Code remain central to most claims. (1) Overtime Pay California’s overtime structure is distinctive: 1.5× the regular rate for hours over 8 in a day or 40 in a week; and 2× the regular rate for hours over 12 in a day Employers with multistate payroll systems often find that other states’ “weekly-only” overtime rules do not meet California’s daily requirements. Misconfigured systems can systematically underpay overtime, and small errors compound quickly across a workforce. Because overtime is based on the regular rate and not necessarily the employee’s base hourly rate, items like nondiscretionary bonuses and differentials can change the overtime calculation—another common source of underpayment when payroll rules are not configured to California’s requirements. (2) Minimum Wage California’s statewide minimum wage is $16.90/hour in 2026, with many cities and counties requiring higher rates. Industry-specific minimum wages, like in fast food and health care, may also apply. Minimum wage exposure often stems from: Off-the-clock work; Unpaid pre- or post-shift tasks; Misapplied meal or rest period premiums; and Pay practices that inadvertently reduce effective hourly rates. Minimum wage violations also interact with exempt status thresholds, which are tied to the state minimum wage. (3) Meal and Rest Periods California requires a: 30-minute off-duty meal break for shifts over five hours; Second 30-minute meal break for shifts over 10 hours (with limited waiver options); and Paid 10-minute rest breaks for every four hours worked. Missed meal or rest breaks trigger premium wages—one additional hour of pay per violation. Additionally, meal and rest period premiums count as wages, so they must appear correctly on wage statements and be paid in the next regular payroll cycle. (4) Off-the-Clock Work Employers must compensate for all time an employee works. Common “off-the-clock” risks include: Pre-shift setup or security checks; Donning/doffing time; After-shift duties; and Remote work outside scheduled hours. Even small increments of unpaid time can push employees into unpaid overtime. (5) Final Pay and Waiting Time Penalties Final pay must be issued immediately upon termination and within three days of voluntary resignation or immediately with proper notice. Delays—even for legitimate administrative reasons—can lead to waiting time penalties that accrue daily for up to 30 days. Why This Matters California’s recent PAGA reforms do not reduce employers’ wage-and-hour obligations; they reinforce the importance of getting compliance right. While the amendments create new cure and penalty-management mechanisms, the underlying requirements governing overtime, minimum wage, meal and rest periods and final pay remain unchanged and continue to drive litigation risk. Employers should reassess payroll systems, break practices, classification decisions and final pay procedures. For more information about the PAGA reforms or California wage-and-hour compliance, contact your Polsinelli Labor and Employment attorney.

Key Highlights New York City’s Earned Safe and Sick Time Act (ESSTA) adds 32 hours of frontloaded unpaid safe/sick time to its existing paid safe/sick time requirements for employers. The ESSTA also expands the permissible uses for both types of leave under the Act to include scenarios tied to caregiving, housing or subsistence proceedings, public disasters and workplace violence. Employers, however, will no longer be required to grant a set number of temporary schedule changes; employees, instead, will enjoy a protected right to request such changes. What Is Changing on February 22, 2026? New York City employers should prepare for significant changes to the City’s ESSTA taking effect February 22, 2026—joining changes to New York state laws affecting disparate impact liability and the use of “stay-or-pay” contracts. The amended ESSTA includes a new bank of 32 hours of unpaid safe/sick time, expanded permissible uses of safe/sick time and a scaling back of obligations under the City’s Temporary Schedule Change Act (TSCA). 1. Employers must provide 32 hours of unpaid safe/sick time in addition to paid ESSTA leave. The ESSTA will require employers to provide employees, upon hire and on the first day of each calendar year, a minimum of 32 hours of unpaid safe/sick time that is immediately available for use. Employers will not, however, be required to carry over unused hours from this unpaid bank to the next calendar year. The Act further contemplates that when an employee needs time off for an ESSTA-covered purpose, the employer generally must provide paid safe/sick time first (if available), unless ESSTA paid time is unavailable or the employee specifically requests to use other leave (e.g., other PTO pursuant to an employer’s vacation policy). One potential issue for employers lies in the Act’s text. It ties the unpaid bank to “upon hire” and “the first day of each calendar year.” With a February 22, 2026, effective date, it is not clear from the statute whether employers must make the unpaid bank available to current employees as of the effective date. Given the short time before the effective date, employers likely will have to make a decision on this point before any additional guidance from the City’s Department of Consumer and Worker Protection becomes available. 2. Employees may now use paid and unpaid safe/sick time for new “covered uses.” ESSTA continues to allow leave for traditional illness/injury, preventive care and care of family members but now expands certain categories and adds new ones, including: Sick Time Additions Leave related to business closure or child school/childcare closure may now include closures tied to a public disaster—not just a public health emergency. Instances in which a public official directs an employee to remain indoors or avoid travel during a public disaster that prevents an individual from reporting for work. Safe Time Additions Circumstances where the employee or a family member is the victim of workplace violence in addition to the existing domestic violence/sexual offense/stalking/human trafficking categories. Certain instances of caregiving for minor children or other care recipients. Legal proceedings or hearings related to subsistence benefits or housing and other related steps necessary to apply for, maintain, or restore benefits or shelter. These expansions overlap with what NYC historically treated as “personal events” under the TSCA’s framework but now more expressly integrates the framework into the ESSTA. 3. The TSCA moves from “must grant” to “right to request” when it comes to temporary schedule requests. Following its effective date, the amendment softens the temporary schedule change regime in the City. Employees remain protected from retaliation for requesting a temporary schedule change, but the law provides that an employer may grant or deny the request, must respond as soon as practicable and may propose an alternative change, which the employee is not required to accept. Employers should keep in mind that independent obligations under federal, state and local accommodation laws remain unchanged, so some schedule adjustments may still be required as reasonable accommodations even where the TSCA request itself is discretionary. Why This Matters These amendments significantly expand the scope and administration of protected leave in New York City. By adding a new unpaid ESSTA leave bank, broadening the reasons that trigger protected absences, and shifting temporary schedule changes to a right-to-request framework, the City increases the risk of missteps in policy drafting, payroll administration and day-to-day management of leave requests. Employers should take time now to evaluate how these changes affect their existing leave, scheduling and reporting practices ahead of the February 22, 2026, effective date. Employers with questions about the amended ESSTA, or who would like assistance assessing or updating their policies and practices in advance of the effective date, should contact their Polsinelli Labor and Employment attorney.

Key Highlights The U.S. Department of Justice (DOJ) filed a lawsuit against the State of Minnesota challenging its affirmative action hiring program. It alleges that Minnesota’s requirement to consider race, sex and other protected characteristics in public employment decisions violates Title VII of the Civil Rights Act of 1964. The case is poised to test the limits of affirmative action in employment and could become a bellwether for similar policies nationwide and across public and private employers. DOJ Targets Minnesota’s Use of Race and Sex in Public Hiring Minnesota law mandates that state agencies take proactive steps to recruit and hire individuals from historically underrepresented groups, aiming to address workforce disparities. In a complaint filed on Jan.14, 2026, the DOJ asserts that this practice unlawfully favors certain applicants based on protected characteristics. Federal lawyers argue that the mandate amounts to intentional discrimination in violation of Title VII’s ban on making employment decisions because of race, color, religion, sex or national origin. The lawsuit acknowledges past U.S. Supreme Court decisions, such as United Steelworkers v. Weber and Johnson v. Transportation Agency, that permitted limited affirmative action plans to remedy persistent inequality. The DOJ, however, contends that those decades-old precedents are outdated and conflict with both Title VII’s text and the Supreme Court’s 2023 decision ending race-conscious college admissions. By certifying the Minnesota case as one of “general public importance,” the DOJ also seeks a special three-judge panel to hear the matter pursuant to 42 U.S.C. § 2000e-6(b), which would fast-track any appeal directly to the Supreme Court. Broader Implications for Employers and State Diversity Initiatives The Department’s challenge signals increased scrutiny of government-mandated diversity, equity and inclusion initiatives. Many employers have already grown more cautious with voluntary diversity programs following Executive Orders issued in 2025, but they were left with some uncertainty on conflicting obligations between federal and state laws. A ruling against Minnesota could further imperil similar state or local requirements for affirmative action in hiring or contracting. If the Supreme Court ultimately curtails or eliminates affirmative action in the employment context, public-sector workforces and contractor practices nationwide may need to adjust accordingly. Polsinelli Labor and Employment attorneys are closely monitoring this case and will advise clients as appropriate as developments unfold.

Key Highlights Brand ambassadors and influencers can present growing misclassification exposure. Luxury, retail and hospitality brands increasingly rely on short-term, brand-facing talent and when these workers are closely integrated into marketing, customer engagement and brand presentation, they can trigger the same wage-and-hour risks as traditional employees. California’s ABC test presents a high bar for independent contractor models. Prong B, in particular, creates challenges when brand ambassadors, stylists and pop-up personnel perform work tied to core brand functions such as customer experience and brand presentation. Control and brand standards drive risk across jurisdictions. Even outside ABC-test states, factors such as training, scripted interactions, fixed schedules, exclusivity or content approval for influencers can undermine independent-contractor classification, regardless of engagement length. Luxury brands increasingly rely on brand ambassadors, stylists, influencers and pop-up personnel to deliver curated customer experiences and reinforce brand identity. These engagements are often short-term or campaign-based and are frequently classified as independent contractor relationships. As worker-classification standards continue to tighten nationwide, however, that model carries growing legal risk. For luxury, retail and hospitality brands, misclassification claims are no longer confined to traditional retail staffing. Brand-facing marketing talent — often viewed as flexible and external — can present the same exposure as in-store employees when classification rules are not carefully applied. Why Classification Has Become a Pressure Point Misclassification can expose brands to significant liability, including unpaid minimum wages and overtime, missed meal and rest periods, payroll tax exposure, statutory penalties and representative or class actions. These risks are amplified in luxury and hospitality settings, where brand standards, customer experience and messaging consistency are central to the business. Although many brand ambassadors view themselves as independent creatives, classification turns on legal standards — not job titles or worker preferences. California’s ABC Test: A High Bar for Luxury Brands California remains the most challenging jurisdiction for contractor models. Under California Labor Code § 2775, a worker is presumed to be an employee unless the hiring entity establishes all three prongs of the ABC test: The worker is free from the control and direction of the hiring entity in performing the work, both under the contract and in practice; The worker performs work outside the usual course of the hiring entity’s business; and The worker is customarily engaged in an independently established trade or business of the same nature as the work performed. Failure to satisfy any prong results in employee status. For luxury brands, prong B often presents the greatest challenge. Brand ambassadors, stylists and pop-up representatives frequently perform work that goes to the core of the brand’s business: marketing, customer engagement and brand presentation. When the brand experience itself is the product, it becomes challenging to argue that these services fall “outside the usual course” of business. Control and Brand Standards Still Matter Elsewhere Outside California, some brands assume classification risk is lower. That assumption can be misleading. For example: New York does not apply the ABC test for wage-and-hour purposes. Instead, courts apply a common-law “control” test that examines factors such as supervision, scheduling, training and integration into the business. Illinois similarly relies on a right-to-control analysis for most wage claims, though ABC-style tests apply in certain statutory contexts, including unemployment insurance. See 820 ILCS 405/212. In practice, these standards still present meaningful risk for luxury brands. Extensive training, required attendance at brand briefings, fixed schedules, exclusivity requirements or detailed scripts and presentation guidelines can all weigh in favor of employee status, even in jurisdictions without an ABC test. The more control a brand exercises over how ambassadors interact with customers and represent the brand, the harder it becomes to sustain a contractor classification. Influencers and Pop-Up Activations: Added Complexity Influencer marketing and pop-up activations present additional classification challenges. Some influencers operate established businesses with multiple clients, supporting independent-contractor status. Others, however, function more like on-demand brand representatives. Classification risk increases when brands require pre-approval of content, dictate posting schedules, restrict work for competitors or tie compensation to strict compliance with brand directives. Engagement length alone does not eliminate exposure. Even short campaigns can give rise to misclassification claims if the underlying relationship resembles employment. Looking Ahead Luxury, retail and hospitality brands will continue to rely on flexible, brand-forward talent to remain competitive. But as worker-classification standards evolve and enforcement intensifies, contractor models that once seemed routine may no longer be defensible. Addressing classification issues at the outset of a campaign rather than after it concludes can help brands preserve flexibility while reducing legal exposure. Brands with questions about independent contractor classification or campaign staffing strategies should consult their Polsinelli Labor & Employment attorney.

Effective January 1, 2026, numerous state and local government employment laws have taken effect. Below is a non-exhaustive summary of key employment law updates for January 2026. For additional insights, register for the 2026 Employment Law Developments: Key Considerations for Employers webinar here. To navigate each employment law update by state, click here. Please note that the above is a non-exhaustive summary of recent employment law developments. For questions or assistance with employment law compliance in 2026, or to ensure you are informed about the latest updates, please contact your Polsinelli attorney.

Key Highlights: A recent amendment expressly codifies disparate impact liability under the New York State Human Rights Law (NYSHRL) for employment discrimination claims. This comes as the U.S. Equal Employment Opportunity Commission has backed away from disparate impact theories in enforcing federal employment discrimination statutes. The increasing use of Artificial Intelligence (AI) tools in personnel processes and decision-making has the potential to raise disparate impact issues to the extent that AI processes have varying effects on specific groups. New York employers may face increased potential exposure from neutral employment practices, underscoring the importance of proactive review and documentation. New York Governor Kathy Hochul signed Senate Bill S8338 on Dec. 19, 2025, which codifies that a facially neutral employment practice may violate the New York State Human Rights Law (NYSHRL) based on its discriminatory effects, even absent discriminatory intent. While the amendment largely clarifies existing law, it comes at a time when federal enforcement of disparate impact theories has become less certain as the U.S. Equal Employment Opportunity Commission has taken a more restrained approach to pursuing disparate impact claims under federal employment discrimination statutes. Against that backdrop, the amendment underscores the continuing importance of state-law compliance and employer attention to outcome-based employment practices, as well as the purportedly neutral decisions of their AI tools. What the Amendment Does The legislation adds a new subdivision to New York’s Executive Law § 296, providing that, in NYSHRL employment discrimination cases, an unlawful discriminatory practice may be established where an employer uses a policy or practice that actually or predictably results in a disparate impact based on a protected characteristic. The statute makes clear that proof of discriminatory motive is not required. After the employee demonstrates that a particular employment practice causes, or predictably will cause, a disparate impact on a protected class, the employer then bears the burden to establish that the practice is job-related for the position in question and consistent with business necessity. Even if that showing is made, an employee may still prevail by showing the employer’s business necessity could be satisfied by a less discriminatory alternative. The statute also requires that an employer’s justification be supported by evidence and not based on hypothetical or speculative considerations, reinforcing the need for objective validation and documentation of employment criteria. Although disparate impact liability is not a new concept, the amendment injects ambiguity into the analysis by prohibiting policies and practices that “actually or predictably” yield disparate results. This raises the specter of challenges to practices that do not “actually” cause a disparate impact but can be argued to “predictably” do so. Given the litigation climate in New York, this additional language creates another reason for employers to be intentional in assessing the effect, or event "predicted" effect, of personnel practices and policies. Why This Matters Now, Especially as AI Gains Ground in Employment Practices By codifying disparate impact liability, New York has increased scrutiny of ostensibly neutral employment practices — such as hiring criteria, screening tools, promotion standards and compensation structures — that may produce statistically significant disparities. AI tools are often adopted to promote efficiency and consistency and typically would not be viewed as intentionally discriminatory. However, these tools present disparate impact risks to the extent that the data inputs, models or selection criteria underlying those tools have varying effects on specific groups. For example, even in the relatively early phases of AI’s adoption, there have been claims in litigation that an employer’s use of AI training datasets disproportionately composed of one protected group (for example, males) results in an adverse disparate impact to members of other groups (for example, females). The beefed-up disparate impact liability under NYSHRL, combined with New York City’s 2023 regulations on AI use in personnel processes, guide in favor of an intentional approach by employers in using these tools for employment decisions. Looking Ahead This amendment applies to employment discrimination occurring on or after its effective date of Dec. 19, 2025, making proactive compliance efforts particularly important. Employers should consider reviewing key employment practices to assess disparate impact risk, ensure that job-related criteria are well supported, and evaluate whether alternative approaches could achieve business objectives with less discriminatory effect. If you have questions about how this amendment may affect your organization, or would like assistance evaluating existing policies and practices, contact your Polsinelli Labor & Employment attorney.

Key Highlights Under Section 503 of the Rehabilitation Act (Section 503) (extending protection to individuals with disabilities), the basic coverage threshold increased from $15,000 to $20,000. Under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) (extending protection based on veteran status), the basic coverage threshold increased from $150,000 to $200,000. Although the Affirmative Action Program (AAP) coverage remains the same for Section 503, the AAP coverage requirements increased accordingly for the VEVRAA and now apply to contractors and subcontractors with at least 50 employees and a single contract of $200,000 or more. On October 1, 2025, the Office of Federal Contract Compliance Programs (OFCCP) increased the jurisdictional thresholds for two key federal contractor laws: Section 503 and the VEVRAA. These higher thresholds affect whether a contractor is covered by each law and, as a result, whether it must maintain written AAPs for individuals with disabilities and protected veterans. The increases result from the Federal Acquisition Regulatory Council’s periodic review and inflationary adjustment of “acquisition-related” thresholds in federal procurement statutes as required by Section 807 of the Ronald Reagan National Defense Authorization Act (41 U.S.C. § 1908). As part of its assistance efforts, the OFCCP has issued a “Jurisdictional Thresholds” infographic and updated its webpage with additional guidance and tools. While federal affirmative action plan requirements for women and minorities have changed significantly in 2025, federal contractors are reminded that affirmative action requirements for individuals with disabilities and veterans remain in effect for covered contractors. If you have questions about how these updated thresholds apply to your organization—or whether your contracts and workforce size trigger written AAP obligations—Polsinelli’s Labor and Employment attorneys are available to assist.

Key Highlights NLRB Poised for a Partisan Shift: With the Senate HELP Committee advancing two of President Trump’s nominees, the NLRB may soon regain a quorum and shift to its first Republican-led majority since 2021 — potentially signaling changes to existing federal labor law. Expanded Remedies Under Thryv Remain in Force — for Now: The NLRB’s Thryv, Inc. decision (2022) broadened employer liability in unfair labor practice cases by requiring compensation for all “direct or foreseeable” harms. Courts Split on the NLRB’s Authority: Federal appellate courts have issued conflicting rulings on the NLRB’s power to award these expanded damages — creating uncertainty until the NLRB or the Supreme Court provides further clarity. Employers Should Prepare for Policy Shifts: A Republican-led majority on the NLRB could narrow Thryv remedies and reexamine key doctrines affecting joint-employer standards, independent-contractor classifications, and union election rules. Employers should monitor developments closely and seek counsel on pending or potential labor disputes. On Oct. 9, 2025, the Senate Health, Education, Labor & Pensions (HELP) Committee advanced two of President Trump’s three pending nominations to the National Labor Relations Board (NLRB). Although the third nominee was tabled following a divided vote, the approvals signal the NLRB may soon regain a quorum and operate under a Republican-led majority for the first time since 2021. Why It Matters Historically, when the NLRB flips partisan control, prior precedent — especially decisions viewed as favorable to labor or broad in scope — often comes under review. Large employers should monitor several key implications: Unfair labor practice liability remains significant under current NLRB law, and U.S. Courts of Appeal have disagreed on whether the NLRB has exceeded its statutory authority. In its December 2022 decision in Thryv, Inc., 372 NLRB No. 22 (Dec. 13, 2022), the NLRB significantly expanded its remedial authority in unfair labor practice cases. The decision clarified that in all cases where a standard make-whole remedy would apply, employers must “compensate affected employees for all direct or foreseeable pecuniary harms . . . suffer[ed] as a result of the [employer’s] unfair labor practice.” The NLRB expressly moved beyond traditional backpay and reinstatement relief to authorize reimbursement of additional costs like out-of-pocket medical expenses and credit card debt. Appellate courts have disagreed on the NLRB’s authority to expand unfair labor practice remedies.Most recently, the Court of Appeals for the Ninth Circuit upheld the NLRB’s use of the Thryv framework in International Union of Operating Engineers, Local 39 v. NLRB. The Ninth Circuit found the NLRB did not exceed its statutory authority in awarding Thryv damages and enforced the NLRB’s remedy order. The Court of Appeals for the Third Circuit took a different tack earlier this year. In its Starbucks-related decision, the Third Circuit held the NLRB’s remedial order for consequential damages exceeded the NLRB’s authority. It reasoned that Congress did not empower the NLRB to award full compensatory damages of that nature. If the NLRB retains a quorum, we expect it to revisit the expanded remedies under Thryv. If the full Senate confirms the two nominees to the NLRB, employers should anticipate that the NLRB will revisit the remedial doctrine set forth in Thryv. While the second Trump administration has indicated an intent to be more labor friendly, a Republican majority may choose to reinstate narrower remedial parameters, limit the “direct or foreseeable” horizon, or otherwise reduce employer exposure. Until such a shift occurs, however, the current Thryv-based standard remains in force and applicable before the NLRB and across circuits that have upheld it. Looking Ahead The HELP Committee’s approvals signal a likely realignment in the months ahead but not an immediate one, as it remains unknown as to when or whether the NLRB will have a quorum. A new NLRB majority may act quickly once seated to revisit recent precedents—not only Thryv, but also rules governing joint-employer status, independent-contractor classifications and union election procedures. The coming months will be a period of heightened uncertainty for employers navigating ongoing unfair labor practice matters. Employers facing organizing activity or unfair labor practice allegations should consult with an experienced member of Polsinelli’s Management-Labor Relations Practice Group to assess how forthcoming NLRB changes may affect exposure, negotiation strategy and overall labor-relations planning.