Employment Law Developments Employers Should Watch in 2026–2027

Employment law developments in 2026 and 2027 will require employers to monitor more than enacted statutes. Proposed regulations, agency guidance, court decisions, temporary injunctions, and technology-related compliance requirements may all affect workplace policies and litigation risk.

California employers face potential changes involving pregnancy accommodations, artificial intelligence, remote workers, and employer-mandated meetings. Federal hiring guidance may also shift as the Equal Employment Opportunity Commission (EEOC) revises or withdraws longstanding materials. Courts continue to evaluate discrimination claims based on the full evidentiary record, while new decisions may affect harassment claims and arbitration.

Employers should distinguish among enacted laws with confirmed effective dates, proposed regulations, agency guidance, court rulings limited to particular jurisdictions or claims, and temporary orders that preserve the status quo during litigation.

The developments below are based on the supplied source summaries. Several matters require status verification before publication or implementation because the summaries describe proposed rules, temporary orders, and developing legal disputes. Employers should obtain jurisdiction-specific advice before changing employment practices.

California Employment Law Developments Expected to Affect Employers in 2027

California’s legislative outlook

Nixon Peabody reviewed California employment laws expected to affect employers in 2027. The supplied summary does not identify the individual laws or explain their specific requirements. Employers should therefore review the underlying statutes rather than rely on a generalized description. Source 1

Preparation should begin before an effective date. Policy revisions require legal review, payroll and human resources configuration, manager training, and updates to employee notices or handbook language.

Employers should create a 2027 California employment-law calendar that tracks legislative developments, regulatory proposals and final rules, agency guidance, court challenges, effective dates, and enforcement provisions. The calendar should identify each legal source, affected employees, required policy changes, implementation owner, training deadline, and current status.

Employers should also review California-specific language in handbooks, offer letters, leave forms, accommodation materials, discipline procedures, and termination checklists. Priority audits should cover employee classification, leave administration, workplace accommodations, recruiting, discipline, compensation, termination, and remote-work arrangements.

Proposed Changes to California Pregnancy Leave and Workplace Accommodations

The California Civil Rights Department has proposed changes involving pregnancy leave, workplace accommodations, employer obligations, and employee rights. The proposal is not a final regulation. Its language may change during the rulemaking process, and the proposal date, public-comment period, adoption date, and effective date may differ. Source 2

Employers should review current pregnancy-disability-leave and accommodation procedures without treating the proposal as final. Procedures should provide a clear channel for requests, require timely interactive-process communications, protect medical confidentiality, and document decisions consistently.

Managers should understand that an employee may make an accommodation request informally. Statements about difficulty performing work, needing a schedule change, or requiring medical support may trigger an obligation to engage in the interactive process. Pregnancy-related requests should not automatically be treated as ordinary attendance or performance issues.

Employers should coordinate pregnancy disability leave, workplace accommodations, benefits administration, scheduling, job assignments, return-to-work procedures, medical documentation, payroll, and leave records. Once the CRD issues final language, legal and human resources teams should compare it with existing policies, update forms, train supervisors, and audit decisions involving leave denials, schedule changes, reassignment, or return to work.

EEOC Changes to Hiring and Criminal Background Check Guidance

Withdrawal of criminal-background-check guidance

The EEOC reportedly rescinded guidance concerning employers’ use of criminal background checks. Source 4

Withdrawal of agency guidance does not eliminate statutory obligations, state and local fair-chance laws, anti-discrimination risks, or background-check notice requirements. Employers should not assume that rescission creates unrestricted authority to reject applicants based on criminal history.

Hiring teams should review when criminal-history information is requested and whether vendors provide required notices and authorizations. Screening criteria should be job-related, consistently applied, and supported by documented business reasons. Where applicable law requires an individualized assessment, employers should maintain records showing how it occurred.

Employers should also review pre-adverse-action and adverse-action procedures, including disclosures, waiting periods, notices, and dispute opportunities. Background-check decisions should remain separate from protected characteristics, protected activity, and unsupported assumptions about an applicant.

Possible rollback of broader hiring guidelines

SHRM reported that the EEOC may roll back longstanding hiring guidelines. The supplied summary provides no further details, so employers should confirm which guidance has changed and whether any action affects binding law. Source 5

Agency enforcement priorities differ from statutes, regulations, and judicial interpretations. A guidance rollback may create uncertainty rather than eliminate exposure. Employers should continue using a documented, consistent, and defensible hiring process.

A hiring compliance review should identify every jurisdiction where the employer recruits or employs workers; inventory federal, state, and local restrictions; review job descriptions and screening criteria; train recruiters and hiring managers; establish escalation procedures; and monitor future EEOC announcements and court challenges.

Discrimination Claims: Courts Continue to Evaluate the Full Evidentiary Record

The Eleventh Circuit reportedly reaffirmed a holistic approach to discrimination claims at the summary-judgment stage. Under this approach, courts may evaluate the overall record rather than isolate individual facts. Source 3

Timing, comparator evidence, workplace comments, performance history, policy deviations, and decision-maker conduct may interact. A single weak fact may not determine the outcome when the complete record suggests discriminatory intent or inconsistent treatment.

Employers should document legitimate reasons for employment decisions and apply policies consistently. Decision-makers should identify deviations from normal procedures and explain them contemporaneously. Relevant communications, performance records, complaints, investigation materials, and decision notes should be preserved under applicable retention policies.

A litigation-readiness review should identify the decision-maker, information considered, applicable policy or business objective, treatment of comparable employees, protected activity, the employer’s response to complaints, and whether the employer’s explanations have remained consistent. Periodic audits of termination, promotion, discipline, and compensation decisions can identify unexplained differences before they become litigation issues.

California’s AI-Related Review Requirement for Employee Terminations

According to the supplied summary, California now requires human review of AI-driven employee termination decisions. The reported measure provides limited enforcement mechanisms and does not establish strong penalties or clear remedies for every violation. Source 7

Limited enforcement does not eliminate discrimination, privacy, data-security, documentation, or reputational risks. Employers should determine whether an AI tool recommends, triggers, or materially influences termination. Human review should involve an accountable person who independently evaluates the facts rather than automatically approving a system output.

Governance controls should include documented human accountability, independent review, testing for disparate impact and inaccurate outputs, restrictions on sensitive employee data, vendor audit rights, data-retention terms, security and confidentiality requirements, records showing the review and final decision, and a prohibition on automated decisions that bypass required legal review.

Human resources, legal, information technology, and data-governance teams should jointly approve tools used in termination, discipline, performance management, scheduling, or compensation.

California’s “Captive Audience” Ban and Employer-Mandated Meetings

The Ninth Circuit reportedly temporarily blocked California’s “captive audience” ban concerning employer-mandated meetings involving political or religious views. Source 6

A temporary block is not a final resolution. It may preserve or suspend enforcement while litigation continues. Employers should confirm the current order, its scope, and later appellate developments before requiring attendance or disciplining employees for nonattendance.

Meeting policies should be reviewed for sessions involving political topics, religious beliefs, union-related issues, workplace conduct, company values, or social issues. Employers should distinguish legally required training from persuasive or ideological messaging and avoid retaliation or adverse treatment based on lawful employee expression. Managers should not pressure employees to disclose political or religious views.

Harassment Claims and Arbitration After a New York Federal Court Decision

A New York federal court reportedly found that nonsexual conduct can constitute sexual harassment and held the related claim barred from arbitration. Source 8

Harassment analysis focuses on the nature and context of conduct, not only whether conduct is explicitly sexual. Repeated gender-based hostility, stereotyping, humiliation, power differences, and workplace context may all matter.

Employers should not generalize the decision to every arbitration agreement or harassment claim. Enforceability depends on the specific agreement, claim, procedural terms, applicable statutes, and judicial interpretation. Prevention practices should include multiple reporting channels, prompt and impartial investigations, anti-retaliation protections, and complete records of findings and remedial action.

Remote Employees Working Outside California

A California court reportedly limited the application of certain California employment laws to remote employees working outside the state. The ruling may affect out-of-state remote employees of California-based companies. Source 9

A California headquarters does not necessarily determine which employment laws apply. The employee’s actual work location may control wage and hour rules, leave, expense reimbursement, workplace safety, privacy, discrimination, payroll, and tax registration.

Employers should maintain an accurate list of each employee’s work location, including temporary and hybrid arrangements. Offer letters and remote-work agreements should identify the approved location. Employees should obtain approval before moving to another state or working from a new jurisdiction.

A remote-work audit should identify each employee’s actual work location; review state and local wage and leave requirements; confirm expense-reimbursement practices; check payroll and tax registrations; review privacy and data-security obligations; update agreements after location changes; and coordinate human resources, payroll, benefits, tax, and legal teams.

Employer Action Plan for November 2026 and Beyond

Fisher Phillips published an “Employer Checklist for November 2026,” according to the supplied source summary. Source 10

Employers should:

1. Verify the current status of every development discussed here.
2. Confirm effective dates, injunctions, appeals, and enforcement provisions.
3. Identify affected policies, forms, systems, and employee groups.
4. Audit hiring and background-check procedures.
5. Review AI-assisted employment decisions.
6. Refresh harassment, accommodation, and retaliation training.
7. Assess multistate remote-work practices.
8. Assign an owner to each compliance area.
9. Maintain version control for handbooks and manager guidance.
10. Schedule follow-up reviews after final rules or court decisions.

Employers should not change practices based solely on headlines or summaries. Each policy should identify the legal source supporting it and the date of its latest review.

Conclusion: Build a Monitoring Process, Not a One-Time Checklist

The most important employment law developments in 2026 and 2027 span legislation, proposed regulations, agency action, and judicial decisions. Their status may change quickly, especially in California pregnancy-accommodation rulemaking, EEOC guidance, captive-audience litigation, AI-related requirements, and remote-work jurisdiction disputes.

A durable compliance process should monitor new developments, confirm legal status and effective dates, map each change to affected policies and employees, train responsible managers, document implementation, and reassess after later guidance or court action.

Employers should obtain jurisdiction-specific advice before changing hiring, accommodation, discipline, termination, meeting, or remote-work practices.

Frequently Asked Questions

What are the most important employment law issues for employers to monitor in 2026?

Employers should monitor California legislative and regulatory changes, EEOC hiring developments, AI-assisted termination decisions, pregnancy accommodations, remote-worker jurisdiction issues, harassment decisions, arbitration, and litigation over employer-mandated political or religious meetings.

Did the EEOC eliminate all restrictions on criminal background checks?

No. Rescinding agency guidance does not eliminate federal, state, or local restrictions. Employers should continue using job-related, consistently applied screening procedures and review fair-chance, notice, authorization, adverse-action, and anti-discrimination requirements.

How should employers respond to California’s pregnancy-accommodation proposal?

Employers should monitor final CRD language, review current leave and accommodation policies, train supervisors, and document the interactive process. A proposal should not be treated as a final rule until adopted and effective.

Can employers still require meetings about political or religious topics in California?

The Ninth Circuit reportedly temporarily blocked California’s captive-audience ban, but litigation may continue. Employers should confirm current court orders and consult counsel before requiring attendance or imposing discipline concerning meetings involving political or religious views.

What does human review mean for AI-driven termination decisions?

Human review should involve an accountable decision-maker who independently evaluates the facts rather than simply approving an automated recommendation. Employers should document the review, preserve relevant data, and test tools for inaccurate or discriminatory outcomes.

Do California employment laws apply to remote workers outside California?

Not necessarily. A California court reportedly limited the application of certain California employment laws to remote employees working outside the state. Employers should analyze the employee’s actual work location and comply with the laws of each applicable jurisdiction.