This article was co-authored by Labor + Employment group lawyer, Christopher Costain.

In March 2026, a Connecticut bill was signed into law which sets new compliance standards for large warehouse employers that use production quotas and related metrics in assessing worker performance. Once the law goes into effect on July 1, 2026, Connecticut will become the sixth state in the country to have enacted such a law, joining California, Minnesota, New York, Oregon, and Washington. For large manufacturers, the new law will significantly impact how employee performance is tracked.

Who Is Covered

The law defines “employer” as any commercial entity that, at any time in the prior 12 months:

  1. Employs 250 or more employees at a single warehouse distribution center in Connecticut; or
  2. Employs 1,000 or more employees at one or more warehouse distribution centers in Connecticut. 

Notably, the employee headcount thresholds include workers who are employed indirectly, such as through a third-party employer or temporary staffing service or agency. Covered employees are those workers who are non-exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act of 1938, as amended.

The law applies only to employers that operate “warehouse distribution centers,” which is defined as a warehouse or warehouse complex as contained within certain North American Industry Classification Systems Codes related to warehousing and storage, merchant wholesalers, e-commerce and mail-order merchants, couriers and delivery services, and warehouse retail establishments.

Covered Quotas & Performance Standards

When the law goes into effect, covered employers will be required to disclose information to workers regarding quota and work speed data performance standards. A “quota” is defined as a work performance standard under which:

  1. An employee is assigned or required to perform at a specific productivity speed, or complete a certain number of tasks, or produce a certain amount of material within a defined time period;
  2. An employee’s time spent performing tasks when a defined time period is measured, recorded, or tallied; or
  3. An employee’s performance is ranked in relation to the performance of other employees.

The law also defines “work speed data” as the specific metrics collected by an employer indicating the amount of tasks performed or materials handled or produced by an employee within a period of time, and whether any amount of that time was spent not performing tasks or handling materials.

Quota Disclosure & Recordkeeping Obligations

The law includes several key compliance obligations for covered employers, including quota information disclosure and recordkeeping requirements:

  1. No later than August 1, 2026, for current employees, or at the time of hiring for new employees, covered employers must provide a written description of each quota to which the employee is subject, including any potential adverse employment action that may result from a failure to satisfy such quota;
  2. If a covered employer changes a quota, it must notify all employees subject to that quota before the new quota goes into effect, in addition to providing a written description of the new quota no later than two business days after the change is made; and
  3. Covered employers must maintain records of each employee’s work speed data, the aggregated work speed data for similar employees at the same warehouse distribution center, and written descriptions of quotas provided to employees, for three years.  Importantly, employers that do not assign or require quotas are not required to preserve any of the records required under the law.

Employee Requests for Quota Information

Under the law, current and former employees may request the following information from their employer or former employer, which must be provided within ten calendar days of receipt of such request, if the employee or former employee believes a quota violates the law:

  1. A written description of each quota to which the employee is/was subject;
  2. A copy of the employee’s personal work speed data for the prior 90 days/the 90 days prior to the employee’s separation from employment; and
  3. A copy of the aggregated work speed data for similar employees at the same warehouse distribution center for the prior 90 days/the 90 days prior to the employee’s separation from employment.

Permissible Quotas & Quota Restrictions

The law also prohibits employers from implementing any quotas that:

  1. Prevent compliance with meal period requirements under Connecticut law;
  2. Interfere with the use of bathroom facilities, including travel time to and from such facilities;
  3. Measure an employee’s performance over a period of time that is shorter than the employee’s workday; or
  4. Set a performance standard that is based solely on ranking the employee’s performance in relation to the performance of other employees.

Anti-Retaliation & Penalties

Employers are prohibited from (1) discharging, retaliating or discriminating against, or (2) taking any adverse employment action against, any employee or former employee for requesting information related to quotas to which they are subject. The law also establishes a presumption of retaliation for adverse employment actions taken within 90 days of protected activity. The presumption of retaliation can be rebutted by clear and convincing evidence that the adverse employment action was taken for a permissible reason or that the employee’s engagement in protected activity was not a motivating factor in the employer’s decision to take such adverse action.

Employees, or the Attorney General (on behalf of a group of employees), may bring an action in the Superior Court to recover damages, injunctive relief, and attorneys’ fees. Additionally, employers that violate the law will be assessed a civil penalty of $1,000 for a first violation, $2,000 for a second violation, and $3,000 for a third or any subsequent violation.

Key Takeaways for Manufacturers

Manufacturers who may be covered under this new law should review all existing quotas and work speed data metrics to ensure they do not violate the law (such as interfering with meal periods or monitoring employee performance for a period of time that is shorter than the employee’s workday), and ensure that records are being preserved in compliance with the law. Manufacturers should also determine whether existing quota systems are supported by written policies or descriptions, and prepare quota disclosure notices prior to the August 1, 2026, deadline. In all cases, manufacturers should consult competent employment counsel for assistance with ensuring compliance with the new law and other important employment law issues. 

This post was co-authored by Government Enforcement + White-Collar Defense Team lawyers Seth B. Orkand and Danielle H. Tangorre and Litigation group lawyer Mallori D. Thompson. This post was originally published as a Legal Update.

On April 10, 2026, the Department of Justice (DOJ) announced a nearly $17.1 million settlement with IBM to resolve allegations that IBM engaged in “illegal DEI practices” and violated the False Claims Act by failing to comply with anti-discrimination requirements in federal contracts. Notably, under the settlement agreement, IBM did not admit liability and expressly denied that it engaged in the conduct alleged. This settlement, and the underlying policy initiative on which it is based, have profound implications for entities that receive federal funding or have government contracts.

Background of DOJ’s Focus on DEI Programs

Most federal contracts contain provisions that require contractors to certify that it will abide by federal civil rights laws and not discriminate against job applicants or employees on the basis of race, color, national origin, or sex. On President Trump’s first day in office, he issued two executive orders requiring every federal contract or grant award to include a clause making compliance with federal anti-discrimination laws material to payment for purposes of the False Claims Act, and a certification that the contractor/grantee “does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” The orders also direct the DOJ and other government agencies to identify and investigate “egregious” DEI practitioners in key sectors, expressly including “the medical industry.” 

On July 15, 2025, then-Attorney General Pam Bondi issued a memorandum directing aggressive DOJ enforcement against race-based, sex-based, or other DEI programs maintained by any entity receiving federal funds. This memorandum directs the DOJ Civil Rights Division and U.S. Attorneys to treat receipt of any federal funds, including Medicare, Medicaid, and HHS program funds, as creating enforceable anti-discrimination compliance obligations under:

  • Title VI of the Civil Rights Act;
  • Section 1557 of the Affordable Care Act;
  • The False Claims Act (FCA); and
  • Title IX

The IBM settlement is the FCA resolution under DOJ’s Civil Rights Fraud Initiative, launched in May 2025. 

IBM’s DEI-Related Conduct at Issue

The DOJ alleges that IBM took race, color, national origin, and sex into account when making employment decisions, including by:

  1. bonusing employees for achieving demographic recruiting targets;
  2. using methods to identify “diverse” candidates for hiring, transfer, and promotion, including the use of “diverse interview slates,” “diverse sources,” and altering interview eligibility criteria based on protected characteristics;
  3. developing race and sex demographic goals for business units and taking race and sex into account in employment decisions to make progress toward those goals; and
  4. offering training, partnerships, mentoring, leadership development programs, and educational opportunities to employees on the basis of race or sex.

Interestingly, the DOJ alleges that IBM engaged in the alleged conduct since at least January 19, 2019, to the present, meaning that DOJ is retroactively applying the Trump Administration’s current view of DEI programs to a period including the first Trump and Biden presidencies.

The settlement agreement suggests that the settlement amount IBM agreed to was determined on the basis of indirect costs (overhead) that IBM allocated to its federal contracts for these practices during the period covered by the agreement. 

Implications for Government Contractors and HR and Compliance Departments

From a risk management perspective, this settlement is a reminder that the DOJ expressly considers DEI programs as violative of federal anti-discrimination laws. Clients that receive federal funding would be well advised to require their HR and talent teams to scrutinize DEI programs that set demographic goals and program eligibility criteria and provide incentive compensation structures on the basis of race, color, national origin, or sex. 

For compliance functions, the settlement also highlights the DOJ’s continued emphasis on cooperation credit in FCA resolutions. The agreement states IBM was credited for cooperation, including early disclosure of facts relevant to the investigation gathered during IBM’s independent investigation, assistance in determining damages and penalties, and voluntary remedial measures such as terminating and/or modifying certain programs, policies, or other activities described in the covered conduct. The settlement reinforces the importance of aligning employment practices with the contractor’s government contract-incorporated obligations, and ensuring internal controls can detect and escalate potential noncompliance. The agreement’s express cooperation credit language also highlights the value the DOJ places on early factual disclosure, structured internal investigations, and documented remediation. 

For government contractors, the settlement is also a cost-charging cautionary tale. The DOJ’s allegations included that IBM allocated indirect costs associated with the challenged practices to federal contracts and sought reimbursement for them. Contractors should reconsider whether allocating costs associated with overhead for diversity-related employment goals should be charged to the government.

What We Are Watching

We anticipate that this settlement is the first of many to come during the remainder of the Trump Administration. It will undoubtedly encourage whistleblowers to come forward to report race- and sex-based DEI hiring and employment activities in the hope of obtaining a portion of the government’s settlement proceeds.

We will continue to monitor how DOJ claims to satisfy the materiality element of the False Claims Act and uses the false certification theory to prosecute recipients of federal funding, such as health care entities receiving reimbursements from federal health care programs, and awardees of federal grant money required to certify compliance with federal anti-discrimination laws.

Minnesota Governor Tim Walz issued an emergency executive order on April 7, 2026, dispatching the Minnesota National Guard after Winona County requested assistance following a cyber attack disrupting its “critical systems and digital services.” The attack occurred on April 6, 2026, and is “significantly impairing the county’s ability to deliver vital emergency and municipal services.”

The attackers are currently unknown, but it is further evidence of the increased threat of cyber-attacks following the war in Iran, which is the subject of a Joint Advisory issued by federal government agencies warning government agencies and critical infrastructure to prepare and prevent cyber-attacks during the war in Iran.

Despite a two-week cease fire, Iran has always been a formidable cyber adversary, and it is anticipated that the cyber-attacks will continue as normal.

This post was co-authored by Data Privacy + Cybersecurity Team and Artificial Intelligence team chair Linn F. Freedman. The post is also being shared on our Data Privacy + Cybersecurity Insider blog. If you’re interested in getting updates on developments affecting data privacy and security, we invite you to subscribe to the blog.

Critical infrastructure operators at the water treatment plant in Minot, North Dakota, were forced to resort to manual processes when its Supervisory Control and Data Acquisition (SCADA) system became inoperable as a result of a March 14, 2026, ransomware attack. The attackers are unidentified, but it comes in the wake of the war in Iran, and both Iran and China are known to lead cyber-attacks against water utilities, which often have vulnerabilities that make them easy targets. Last month, the Water Information Sharing and Analysis Center, along with information sharing organizations for the auto, aviation, food, health, IT, national defense, oil and natural energy, and retail and hospitality industries issued a Joint Advisory to their members, including water facilities, warning them of increased cyberattacks from Iranian hackers, as well as physical attacks against critical infrastructure entities. The warning concluded by stating that “the threat environment is likely to remain highly volatile.”

Minot’s water system provides water to approximately 80,000 users. Although the water supply and quality were not affected by the attack, operators were required to manually read gauges for 16 hours while they uninstalled the compromised SCADA system. It has taken Minot over two weeks to spin up a new server.  

Since water facilities are a target for nation state cyber actors, the state of New York recently introduced cybersecurity standards for both drinking and wastewater treatment facilities. Other states will hopefully follow suit so the water supply and quality available will be less vulnerable to attack.

Critical infrastructure operators should be aware of the heightened risk, prepare for an attack, and test their incident response processes through a cybersecurity tabletop exercise that is designed to address a shut down so processes can be improved and services restored as efficiently as possible. We all depend on the basic necessities of food, water, electricity, and access to financial services, all of which could be downed by an attack and dramatically impact our lives. We depend on critical infrastructure operators to have measures in place to prevent and mitigate the effects of an attack.

This post was co-authored by Data Privacy + Cybersecurity Team and Artificial Intelligence team chair Linn F. Freedman. The post is also being shared on our Data Privacy + Cybersecurity Insider blog. If you’re interested in getting updates on developments affecting data privacy and security, we invite you to subscribe to the blog.

Iran has always been a formidable cyber threat to the United States, but after the war in Iran commenced, the attacks are coming frequently and in full force. According to the Joint Cybersecurity Advisory issued on April 7, 2026, by the FBI, CISA, NSA, EPA, DOE, and Cyber Command, Iranian-based hackers are targeting operational technology devices connected to the internet, including programmable logic controllers (PLC). The Advisory notes that the PLC disruptions have been seen “across several U.S. critical infrastructure sectors through malicious interactions with the project file and manipulation of data…resulting in operational disruption and financial loss.”

The Advisory states that U.S. organizations “should urgently review the tactics, techniques, and procedures (TTPs) and indicators of compromise (IOCs) in this advisory for indications of current or historical activity on their networks, and apply the recommendations listed in the Mitigations section of this advisory to reduce the risk of compromise.”

If your organization is considered critical infrastructure, it is crucial to review the Advisory, including the indicators of compromise and mitigation techniques.

This post was co-authored by Data Privacy + Cybersecurity Team and Artificial Intelligence team chair Linn F. Freedman. The post is also being shared on our Data Privacy + Cybersecurity Insider blog. If you’re interested in getting updates on developments affecting data privacy and security, we invite you to subscribe to the blog.

This post was co-authored by Labor + Employment Group lawyer Christopher Costain.

While employers are typically aware of their obligations to engage in the interactive process in response to reasonable accommodation requests due to disability under federal and state law, employers may not be aware of one specific accommodation request that may be on the rise of late – commuting accommodations. For example, an employee may request to work remotely or under a hybrid schedule based on a medical condition. While such accommodations may be typically associated with remote or hybrid work schedule arrangements, employers may receive other requests such as changes to work schedule or hours among others. Therefore, the question remains – are employers required to accommodate requests related to their daily commute?

Commuting Accommodations Under the ADA and Equivalent State Law

Whether an employer must provide a reasonable accommodation to an employee with a disability in connection with their commute to work under applicable law is a legal issue that has evolved in recent years. Historically, an employee’s length and means of commute were considered outside the employer’s control and therefore, typically, employers were not required to provide reasonable accommodations with regard to employee commutes. However, court decisions in recent years, especially after COVID-19, have held that, in certain circumstances, employers may have an obligation to accommodate an employee in relation to their commute.

Recent Nationwide Court Decisions and Federal Agency Guidance

In 2023, the U.S. Court of Appeals for the Seventh Circuit held, in EEOC v. Charter Communications, 75 F.4th 729 (7th Cir. 2023), that the employer was required to provide a schedule accommodation to an employee who experienced difficulty driving at night due to a vision impairment. The Charter Court found that, because the employee’s disability substantially interfered with his ability to travel to and from work, and because commuting to work was a prerequisite to the essential job function of attendance, the employee was entitled to a work schedule accommodation that would allow him to drive only during the daytime. The court also took note of the fact that the employee experienced difficulty in accessing the workplace because of their work schedule, over which the employer had control as it related to scheduling the employee for shifts throughout the week. The court distinguished the plaintiff’s need for a commute accommodation from other cases in which employees were not entitled to accommodations based on the fact that they lived far from the workplace, a variable that was within the employee’s control.

The federal Equal Employment Opportunity Commission issued guidance in February 2026 reiterating  the Charter Court’s holding, providing that employers may be required to consider flexible work schedules to enable a qualified employee with a disability to effectively accomplish their commute and access the workplace. 

Additionally, in 2025, the U.S. Court of Appeals for the Second Circuit held, in Tudor v. Whitehall Central School District, 132 F.4th242 (2d Cir. 2025), that employees may be entitled to a reasonable accommodation even if they are able to perform their essential job functions without an accommodation. Therefore, the fact that an employee is able to perform their essential job functions once they arrive at the workplace and irrespective of their commute, does not foreclose the possibility that they may be entitled to a commuting accommodation, such as a schedule adjustment so the employee may use public transportation or drive during the daytime, to allow them to get to and from work with less difficulty.

Key Takeaways for Evaluating Requests for Commute Accommodations

In all cases, the employee’s requested commute accommodation must be: 1) reasonable; 2) related to the employee’s ability to perform their essential job functions (as opposed to simply providing a personal benefit to the employee or eliminating a perceived inconvenience to the employee); 3) it cannot eliminate an employee’s essential job function; and 4) it cannot pose an undue hardship on the employer. Manufacturers should also consider the nature of the employee’s difficulty in commuting to work, including whether the employee or the employer have control over the variables that are causing that difficulty.  In addition to engaging in the interactive process with employees who request reasonable accommodations, manufacturers should ensure that requests for reasonable accommodations are reviewed carefully by human resources professionals, that employees are asked to clarify the nature of their request when necessary, and that employees provide sufficient medical documentation to support their request.

Although employees decide where and how far away from the workplace they live, employers decide how to manage the schedule and should be prepared to review employee requests for commuting accommodations with these key legal principles in mind. Manufacturers should also consult competent employment counsel for assistance with ensuring compliance with federal and state anti-discrimination laws and other important employment law issues. 

This post was co-authored by Labor + Employment Group lawyer Christopher Costain.

Flu season, which extends into spring, can be a particularly long season for manufacturers, especially when their workforces and workplaces are significantly impacted by the illness. Below are reminders for manufacturers about the various legal implications related to the flu and its impact on the workplace. 

Paid Sick Leave

Employees who contract the flu without significant medical complications may be able to use accrued paid sick leave under the law and under an employer’s policy to cover time off to seek medical treatment or to rest and recover. Many states and localities have implemented paid sick leave programs in recent years requiring employers to provide paid sick leave to employees in connection with their own illnesses in addition to providing care to family members. In addition to the new paid sick leave laws, existing laws continue to develop, expanding the qualifying reasons for the permitted use of leave and the definitions of family members who are covered by the law. Manufacturers should stay up to date with applicable paid sick leave laws and ensure compliance with changing requirements as employees seek to use their accrued leave to recover during flu season.

Family and Medical Leave

Although the flu generally does not trigger protections under the federal Family and Medical Leave Act (FMLA) or its state equivalents, employees may be entitled to job-protected leave if they, or their covered family member, are suffering from a particularly severe case. Specifically, cases of the flu that involve medical complications may trigger FMLA protections if they constitute a “serious health condition,” meaning they involve either inpatient care or continuing treatment by a healthcare provider. Where the flu and related medical complications incapacitate an employee for more than three calendar days and require a course of continuing treatment, the employee may be entitled to leave under the FMLA.

In reviewing employee requests for leave in connection with the flu, manufacturers should be aware that mere communications between an employee and a healthcare provider, such as communications through a provider messaging portal or by telephone or email, generally do not constitute continuing treatment under the FMLA. Additionally, manufacturers should keep in mind that they may require employees to submit a certification from a healthcare provider supporting the need for FMLA leave. 

Reasonable Accommodations

Generally, short-term illnesses such as the flu and the common cold are not considered disabilities under the Americans with Disabilities Act (ADA) and therefore do not entitle an employee to leave as a reasonable accommodation. However, short-term or temporary conditions that are sufficiently severe or involve complications may meet the definition of “disability” under the Americans with Disabilities Act (ADA) by substantially limiting one or more of the employee’s major life activities. In such rare cases, and to the extent an employee is not otherwise eligible for or has exhausted their available job-protected leave under the federal or state FMLA, employees may be eligible for leave as an accommodation under the ADA. In such cases in which an employee not otherwise eligible for leave under the FMLA requests leave as an accommodation under the ADA, manufacturers should engage in the interactive process to determine whether an accommodation is necessary.

Managing Leave and Time Off During Flu Season

As the 2026 flu season continues to impact business operations throughout winter and into  spring, manufacturers should ensure that managers are managing employee absence and leave consistent with their policies on attendance, absences, leave, and time off, as well as applicable law. Managers should be reminded to confer with Human Resources about these issues before taking action, to ensure such actions are consistent with the law and relevant policies. In addition, employers who suspect that there may be employee abuse of their time-off and leave policies should consult competent legal counsel to address these issues.

Welcome to the last of our three posts with our look ahead to 2026—the environmental edition. If you follow this blog, you have probably sensed a trend: environmental regulation rarely moves in a straight line. This coming year will be no different. Below is a more detailed look at three areas we will be watching this year.

1. PFAS Reporting and Liability

Manufacturers will be spending more time thinking about PFAS in 2026. We have been talking about the Toxic Substances Control Act (TSCA) PFAS reporting rule for years, and it is expected to become final early in 2026. As we previously reported, this rule will require manufacturers to report certain information on PFAS-containing articles going back as far as 2011. The EPA proposed some important changes to the rule at the end of 2025, including exemptions for de minimis concentrations, imported articles and chemicals used in research and development. Once the TSCA rule is finalized, it will require manufacturers to report extensive information about PFAS uses, production volumes, byproducts, exposures, and disposal.

In addition to the federal reporting requirement, states are getting in on the action. If your products travel into Minnesota, Minnesota’s sweeping PFAS‑in‑products statute (Amara’s Law) will require you to report products with intentionally added PFAS. By July 1, 2026, manufacturers will be required to disclose product‑specific PFAS details, including the type and amount of the PFAS in the product as well as its purpose or function.

These federal and state reporting obligations create challenges for manufacturers to dive deep into their supply chains in an attempt to gather the required information. For sectors using PFAS indirectly—such as coatings, plastics, electronics, and molded components—the data‑gathering burden may be significant.

In addition to reporting obligations, investigation and remedial obligations related to PFAS are on the rise. The EPA plans to maintain CERCLA hazardous‑substance designations for PFOA and PFOS, signaling continued expansion of PFAS‑related cost recovery and cleanup obligations. That means manufacturers with current or historical PFAS use—or who acquired property with legacy PFAS contamination—will likely face increased risk of enforcement actions or third‑party claims.

2. Water Law Uncertainty: WOTUS and NPDES Permitting Changes

Water regulation remains a challenge for many manufacturers, and 2026 won’t offer much relief. As my colleagues have previously explained, the continued regulatory back‑and‑forth regarding the definition of Waters of the United States (WOTUS) under the Clean Water Act has left manufacturers guessing as to the activities that will trigger Clean Water Act jurisdiction. This matters because facility expansions, stormwater projects, and wetlands issues all hinge on these key jurisdictional determinations.

At the same time, both EPA and states are tightening oversight of NPDES permitting for indirect discharges. Manufacturers whose wastewater enters complex conveyance systems, such as municipal treatment systems, may face additional pretreatment, sampling, monitoring, and recordkeeping obligations as regulators try to close gaps in indirect discharge oversight. Spoiler alert—PFAS are emerging in this context, too.

3. The Patchwork of State Extended Producer Responsibility (EPR) Laws

For manufacturers selling their products into multiple states, the growing patchwork of packaging EPR laws is quickly becoming a compliance challenge. A number of states, including Colorado, California, and Minnesota, now have packaging EPR programs, each with different definitions of producer, different covered packaging materials, and different registration and reporting deadlines. And many states, including Massachusetts, New Jersey, and New York, are poised to follow.

The variability in these laws makes it difficult for manufacturers looking to develop a one-size-fits-all approach. Manufacturers should stay on top of these laws and their requirements in an attempt to develop as streamlined a strategy as possible for compliance.

In late 2012, we created the Manufacturing Law Blog with the goal of providing our manufacturing clients with a holistic approach to the unique issues they face in their global operations. 

Starting in 2016, we began a tradition of dedicating our first three posts of the year to a yearly outlook from different vantage points.

Here are corporate compliance and litigation issues that manufacturers might expect to face in 2026:

  1. Tariffs are here to stay: We are all waiting to see how the United States Supreme Court rules on the legality of the “reciprocal tariffs.” There is a significant amount of activity regarding the “what ifs” surrounding the ruling, including whether companies will be able to seek refunds. What is more certain, however, is that there is no indication that the administration will return to a “low tariff” environment. The manufacturing industry will continue to be impacted by the steel and aluminum (232 tariffs) as well as other similar tariffs developed over time. We have worked with many manufacturers to mitigate their tariff exposure through various means, which will continue in 2026.
  • M&A Activity will continue to be hot for manufacturers of all sizes: In 2025, our group handled over 15 transactions; some were for corporate buyers and others were for private equity; some were acquisitions and others were sales; and some were very large in terms of transaction size and others were small. The M&A market for small to medium sized manufacturers will remain hot. The key for all businesses is to be prepared and have your advisory team in place—the competition for deals remains fierce.  
  • Business to business disputes are becoming more prevalent: Everyone always talks about lawsuits that make the news. But for many manufacturers, there are disputes that never make the headlines and, frankly, never make it to court. We are always advising companies behind the scenes as they try to enforce contractual rights or defend against them with sensitivity for business issues. Too often, lawyers forget that disputes can be opportunities to keep and expand business—just as much as it may destroy relationships. Further, if you are going to get into a contract dispute with someone, the key is to learn from it and improve the contractual language moving forward. Too many manufacturers are relying on templates and that can burn companies when enforcement is required.   

This post was co-authored by Labor + Employment Group lawyer Christopher Costain.

As we look ahead to 2026, several significant employment law developments and trends are on the horizon, especially with regard to local and state laws. Below are a few key issues likely to impact manufacturers in 2026:

Regulation of the Use of Artificial Intelligence in Employment

Employers, including human resource professionals, are increasingly turning to generative artificial intelligence (AI) to help sort applicant and employee data and make employment decisions, including related to screening and hiring. Although AI has increased efficiency in these processes, employers must ensure compliance with rapidly evolving state laws, some of which require employers to prepare risk assessments related to the use of AI in employment decision-making, provide pre-use notices to affected individuals, and provide opt-out rights. In addition to the burgeoning patchwork of state AI legislation, President Trump signed an Executive Order in December 2025, titled “Ensuring a National Policy Framework for Artificial Intelligence,” which, in part, sets out the Trump administration’s plan to target state AI laws which are deemed to “embed ideological bias within models.” While it remains unclear which state AI laws may run afoul of the executive order, and how the federal government’s enforcement efforts will take shape, manufacturers should stay up to date on applicable state and federal AI laws when using AI.

Expansion of State Anti-Discrimination Protections

In recent years, state anti-discrimination laws have expanded to incorporate more protected classes, including hairstyle or hair texture, immigration status, and status as a victim of family violence or sex trafficking, among others. These expansions are likely to continue at state and local levels, especially as the federal government turns its enforcement focus to unlawful diversity, equity, and inclusion initiatives, among others. 

Expansion of State Family and Medical Leave Programs

State family and medical leave laws and income-replacement programs continue to expand to cover more employees and provide greater benefits for a wider array of qualifying reasons. In recent years, qualifying reasons for the use of state family and medical leave programs have grown, with some providing job-protected leave in connection with prenatal care and certain pregnancy-related complications. Manufacturers should also be vigilant for changes in state income-replacement programs, including whether employees may use their accrued paid time off to supplement state paid leave benefits, and increases to the amount of benefits available and contribution amounts.

Heightened Scrutiny of Non-Compete Agreements at State Level

One of the Trump administration’s top priorities in 2025 was to roll back the Federal Trade Commission’s Biden-era “Final Rule” which would have banned nearly all non-compete agreements in employment. In executing that plan, the federal government withdrew its appeals pending before the Fifth and Eleventh Circuit Courts of Appeal, after District Courts in Texas and Florida struck down the Final Rule on the grounds that the FTC did not have authority to issue it. While the federal government abandoned the non-compete ban, in the months that followed, non-compete legislation continued to percolate at the state level, and more regulation is likely to follow in 2026. A number of state non-compete statutes limit the circumstances under which non-competes can be used by employers such as limitations based on salary thresholds, non-exempt status, job duties and industry type, and geographic and temporal scope, in addition to other criteria. As these restrictions continue to expand at the state level, manufacturers should review their non-compete agreements and avoid using broad restrictions, instead developing and implementing narrowly tailored provisions that protect a specific, articulable business interest and are compliant with applicable state law.

Changes at the National Labor Relations Board

The National Labor Relations Board spent much of 2025 without a quorum until the Senate appointed President Trump’s nominees in December, restoring the Board’s quorum and allowing it to roll out its enforcement and rulemaking agendas in 2026. The Board is expected to swiftly begin reversing or narrowing many of the Biden-era labor protections and issuing its own binding decisions. In addition, the Board will also likely begin to process a substantial backlog of unfair labor practices charges and appeals that were left pending when the Board did not have a quorum. Manufacturers should revisit any pending matters with the NLRB and be prepared for the NLRB to renew its enforcement activities, albeit within a new landscape and focus.