Category: Legal Updates

  • 2026 Employment Law Outlook: What Employers Should Watch

    2026 Employment Law Outlook: What Employers Should Watch

    Each year, we step back to review the employment law developments employers should be watching in the year ahead — at both the federal and state level.

    As we move into 2026, the employment law landscape continues to evolve. At the federal level, the current administration is reshaping workplace policy through agency leadership changes, regulatory reviews, enforcement priorities, and ongoing litigation. Notably, both the Equal Employment Opportunity Commission (EEOC) and the National Labor Relations Board (NLRB) now have a quorum after operating without one for much of the past year — restoring their ability to issue guidance, revise regulations, and decide pending cases. Some of these efforts may result in formal changes this year, while others signal longer-term shifts employers should be aware of as they plan and make decisions.

    This annual update provides a high-level look at federal employment law issues to keep on your radar in 2026, along with key Alabama state law developments that may affect employers operating in or employing workers in the state. While we can’t predict outcomes, our goal is to help ensure leaders across industries are informed about what may be coming in the year ahead — and where policy and enforcement signals suggest potential change.

    Pregnant Workers Fairness Act (PWFA)

    The biggest potential federal employment law change this year may involve the Pregnant Workers Fairness Act (PWFA), which was signed into law in 2022. The current administration has indicated that it intends to review the prior administration’s guidance on the PWFA, including whether to narrow aspects of the EEOC’s interpretation related to how broadly accommodations are defined, what the interactive process must include, and which issues are prioritized in enforcement.

    At the same time, ongoing litigation continues to shape how the law is applied. These challenges include a case brought by 17 states contesting the EEOC’s expansive interpretation of “pregnancy, childbirth, or related medical conditions,” as well as a 2024 Louisiana case that blocked certain religious employers from being required to accommodate elective abortions. Most recently, on January 14, 2026, the U.S. Court of Appeals for the Fifth Circuit announced it will reconsider whether the PWFA was constitutionally enacted, adding another layer of uncertainty to how the law may ultimately be interpreted.

    Taken together — the EEOC’s regulatory review, constitutional challenges moving through the courts, partial injunctions, and continued enforcement of current cases — the PWFA is an area where employers may see clarification or adjustment sooner rather than later. Importantly, the law itself remains in effect, and employers should continue to comply with current requirements while monitoring how guidance and enforcement priorities may evolve. For organizations that implemented broad policy changes in response to the initial regulations, this is an area worth watching closely in 2026.

    Fair Labor Standards Act (FLSA)

    While the PWFA represents one of the clearest areas where regulatory refinement may occur this year, wage and hour law remains the area where even incremental changes can have the greatest operational and financial impact for employers.

    The 2024 FLSA white-collar salary threshold increase was rolled back by the federal courts and remains on hold. As a result, the Department of Labor (DOL) is expected to revisit the salary threshold in 2026, with the potential for a more modest increase than previously proposed. The DOL has also signaled that additional regulatory action may be forthcoming, leading some to anticipate that the agency could review not only the salary level, but also the duties tests used to determine exempt status.

    In addition, the current administration has indicated it intends to rescind the Biden administration’s six-factor “economic realities” test for independent contractor classification. In 2025, the DOL announced it would no longer apply the Biden-era test when investigating wage and hour claims and is expected to revert to the two “core factors” framework used during the prior Trump administration. At present, while the DOL is not using the six-factor test in enforcement actions, it remains the regulatory standard applied in private litigation — creating a split employers should continue to monitor.

    Employee Benefits and ERISA

    Employee benefits regulation is another area to watch in 2026, particularly under ERISA. While major statutory changes are unlikely, the Department of Labor continues to shape employer obligations through enforcement priorities and sub-regulatory guidance rather than new legislation. Areas of focus include fiduciary oversight of retirement plans, mental health parity compliance, and transparency requirements for health plans. Together, these developments suggest that expectations around benefits governance, documentation, and oversight may continue to evolve as enforcement activity continues.

    National Labor Relations Board (NLRB)

    After operating for much of last year without a quorum, the National Labor Relations Board is fully operational again in 2026, allowing it to issue decisions, clear its backlog, and advance policy priorities that had been on hold. Employers should expect increased Board activity beginning with long-pending unfair labor practice and representation cases.

    With a newly aligned majority, the Board may revisit several Biden-era positions through case decisions rather than formal rulemaking, including standards governing employee handbook policies, independent contractor classification, bargaining unit determinations, and union election procedures. While major shifts may unfold gradually, the restoration of a quorum alone signals a more active enforcement and decision-making environment for employers in 2026.

    AI in Employment Decisions

    The use of artificial intelligence and automated decision systems in hiring, promotion, and performance management continues to be an emerging employment law risk area in 2026. While there is still no comprehensive federal law governing AI in employment, courts and regulators are increasingly applying existing anti-discrimination and labor laws to AI-assisted decision-making.

    One of the most closely watched cases is Mobley v. Workday, Inc., pending in federal court in California. In that case, plaintiffs allege that Workday’s AI-driven applicant screening tools disproportionately excluded older, Black, and disabled applicants, in violation of Title VII, the ADEA, and the ADA. In 2025, the court allowed the case to proceed as a nationwide collective action, reinforcing the principle that employers may face liability for discriminatory outcomes even when decisions are influenced by third-party AI tools.

    At the state level, Alabama has begun engaging in AI policy discussions, though it has not enacted a law specifically regulating the use of AI in employment decisions. Recent legislative activity has focused on AI disclosure requirements and limitations on AI-only decision-making in certain industries, such as insurance, signaling increased attention to how automated systems affect individuals and consumers. To date, Alabama continues to rely on existing employment and anti-discrimination laws to address AI-related workplace issues.

    For employers, the takeaway in 2026 is less about immediate statutory change and more about risk management and oversight. Employers using AI tools should understand how those systems operate, evaluate outcomes for potential disparate impact, and be prepared to explain and defend employment decisions that rely on automated or algorithmic processes as scrutiny continues to evolve.

    Alabama Employment Law Updates to Watch

    While Alabama has not enacted sweeping employment law reforms, several administrative and statutory changes taking effect in late 2025 and 2026 are worth noting for employers operating in or employing workers in the state.

    Portable Benefits Accounts for Independent Contractors (Effective December 31, 2025)

    Under Alabama Senate Bill 86, independent contractors may begin establishing voluntary portable benefits accounts at the end of 2025. These accounts are designed to allow contractors to receive contributions for benefits such as health care or retirement without altering their classification status. Participation is optional, but employers that rely on contractors or gig workers should understand the framework, as it may influence contractor expectations, engagement models, and competitive positioning.

    Nonresident Tax Withholding Changes (Effective 2026)

    Beginning in 2026, Alabama will exempt certain nonresident workers from state income tax and withholding for work performed in the state for 30 or fewer days, provided the employee’s home state offers reciprocal treatment. This change is particularly relevant for employers with mobile, project-based, or traveling workforces and may require updates to payroll tracking and withholding practices.

    Looking Ahead

    While 2026 may not bring immediate, across-the-board changes, the direction of policy, enforcement, and litigation offers important insight into where expectations for employers may be headed. Staying informed allows leaders to anticipate change, assess risk, and respond thoughtfully as guidance evolves. We will continue tracking these developments throughout the year and working with organizations to translate legal change into practical, operational decisions.

  • What Employers Need to Know About the Big Beautiful Bill

    What Employers Need to Know About the Big Beautiful Bill

    On July 4th, the President signed into law the “One Big Beautiful Bill Act” (BBB), a massive budget reconciliation measure aimed at providing major tax cuts, stimulating the economy, expanding funding for defense and border protection, cutting certain social welfare programs, and raising the national debt ceiling. At nearly 900 pages, there’s a lot to digest. What follows is our interpretation of key provisions as they relate to employers.

    Tax Cuts for Employees and Employers

    As we understand it, these deductions are temporary, starting in 2025 and expiring after the 2028 tax year.

    • Overtime Wages:
      Employees who earn “qualified overtime” can deduct up to $12,500 for single filers or $25,000 for joint filers. Qualified overtime is defined under the Fair Labor Standards Act (FLSA). These deductions phase out for employees earning over $150,000 (single) or $300,000 (joint). Our understanding is that employers will need to track qualified overtime separately and report it on W-2s, although tax withholding procedures remain unchanged.

    • Tipped Wages:
      Employees can deduct up to $25,000 in “qualified tips” received in jobs that customarily receive tips prior to December 31, 2024. This deduction also phases out based on gross income. It appears that employers must continue reporting tips separately on W-2s, consistent with current requirements.

    • 1099 Contractors:
      The reporting threshold for payments to independent contractors increases from $600 to $2,000. (Are your 1099 employees misclassified? We talk about that here.)

    Changes to Benefits Programs

    • Dependent Care FSAs:
      Maximum contributions increase from $2,500 to $3,750 for single filers and $5,000 to $7,500 for joint filers. Employers are not required to adopt the new maximum, but doing so may enhance employee benefits. From our perspective, if employers choose to increase limits, plan documents should be updated with the plan administrator.

    • Paid Family and Medical Leave (PFML):
      Tax credits for PFML are now permanent. The employment period for eligibility is reduced from 12 months to 6 months, with a minimum of 20 hours/week worked. Employers required to provide leave under state/local laws can still claim credits for leave provided beyond those requirements. In our reading, the bill offers two calculation methods for the credit:

      1. As a percentage of wages paid to qualified employees during leave.

      2. As a percentage of total premiums paid or incurred for insurance covering PFML, regardless of whether leave was used.

    • Telehealth Services:
      Employers can continue to offer telehealth under HDHPs without imposing a deductible for employees or eligible dependents.

    • Employer Student Loan Payments:
      The tax exclusion for employer contributions toward student loans up to $5,250/year is now permanent. Inflation adjustments begin after the 2026 tax year. Employers should update payroll and accounting systems accordingly.

    • Relocation Expenses:
      The temporary elimination of moving expense deductions and tax-free employer reimbursements (from the 2017 Tax Cuts and Jobs Act) is now permanent.

    Immigration Compliance

    The BBB provides significant funding for ICE, which likely means:

    • More frequent and rigorous I-9 audits.

    • Increased scrutiny of hiring and retention practices for foreign workers.

    Our recommendation, based on this understanding, is that employers should conduct thorough I-9 audits, ensure all staff completing I-9 forms are trained, and consider using the Federal E-Verify system if not already doing so.

    Final Thoughts

    The Big Beautiful Bill introduces substantial changes that directly impact employers, from tax deductions and benefits program enhancements to stricter immigration compliance requirements. From our perspective, employers who proactively update policies, train staff, and adjust payroll systems will be better positioned to leverage the benefits while maintaining compliance.

    This is a complex, evolving area. Our intent here is to share our understanding and interpretation, not legal or tax advice. We encourage employers to consult directly with legal, tax, or benefits professionals to determine how these provisions apply to their specific situation.

  • Employment Law Updates: Key Changes Impacting Your Business This Year

    Employment Law Updates: Key Changes Impacting Your Business This Year

    As we have already seen in the last two weeks, with a new administration comes big changes. Let’s take a look at what we know is ahead for us with employment law updates in 2025 and what may still be to come. 

    Alabama Employment Law 

    For employers in Alabama, there are a few laws that passed last year that may have tax implications for your organization. You can click on any of the headings to read more about each of these employment law updates in 2025. 

    Childcare Center Tax Credit: This tax credit went into effect on January 1, 2025 and will run through December, 31, 2027, unless it gets extended. In order to qualify, the organization must be a childcare provider licensed by the state and participate in the Qualified Rating and Improvement System and Child Care Subsidy Program. Qualifying organizations may receive a tax credit of up to $25,000 annually to be used to against income taxes, state portion of the financial institution excise tax, insurance premiums tax, or utility license tax. 

    Workforce Housing Tax Credit: The housing credit is intended to encourage and promote investment in affordable rental housing for low-income families near employers or new areas of economic growth. It offers a dollar-for-dollar credit for certain Alabama tax liabilities. 

    Overtime Pay Exemption: The overtime pay tax exemption continues for 2025 and is currently set to expire on June 30, 2025. Currently employees are not taxed on overtime wages and the state has enforced certain reporting requirements on employers. We will keep an eye on this to see if the exemption is extended beyond the current expiration date.  

    Alabama House Bills to watch

    There are currently three bills in the state legislature bringing possible employment law updates in 2025. These are the bills under consideration that could impact employers if passed.  

    HB20: In recent years there have been a few states and localities to look at discrimination on the basis of weight, and Alabama has joined the list. House Bill 20, if passed, would make it illegal to base hiring and employment decisions on a person’s weight or body size. It’s important to note under this bill that there is not a Bona Fide Occupational Qualifications (BFOQ) exception. 

    HB21: House Bill 21 mirrors the Federal law requiring employers to provide reasonable break time and make a reasonable effort to provide a private location, other than a bathroom, for employees who are nursing mothers to use for lactation purposes. 

    HB29: House Bill 29 relates to updates to the current state unemployment benefits requirements. The primary impact of this Bill would be to change the current requirement that a recipient of benefits apply to at least three (3) positions per week to retain their benefits up to five (5) applications per week. 

    Federal Employment Law: 

    Let’s start by looking at what bills are sitting in the House and Senate that might impact employers this year, then we’ll discuss the administrative actions that have occurred in the last two weeks, what we know and don’t know about them, and how they may impact your organization. 

    There have been recent bills introduced in the House and/or Senate relating to wages for secondary employment being exempt from income taxes, updating the Immigration and Nationality Act with regards to E-Verify usage, and multiple bills that address various aspects of immigration that could have an impact on work visas and authorizations. There isn’t much information available about each of these bills yet as they were just introduced and the text has not yet been made public on Congress.gov. 

    Executive Orders

    Now let’s talk about the recent Executive Orders that have been signed by President Trump and what they may mean for your organizations. 

    In summary, there are a few major areas that we will be watching over the next year. The Executive Orders signed by President Trump leave a lot of questions unanswered and we will just have to wait and see how they ultimately impact Federal agencies and contractors, as well as other private and public employers. The primary areas to watch are

    • immigration and the impact on work visas and authorizations
    • regulations pertaining to federal contracting including DE&I initiatives
    • Title VII protections against discrimination on the basis of sexual orientation and gender identity.

    The Trump administration is focused on ending “illegal and discriminatory programs” that were implemented as part of Biden’s DE&I initiatives. President Trump has required that all Federal employment practices, union contracts, and training programs and policies be reviewed and brought into compliance with Executive Order 14151.

    EO14151 requires that employment decisions and practices be based on individual initiative, skills, and performance, and that DE&I factors, goals, mandates, etc. are not factored into the decisions. It also dictates that Federal agencies require that their contractors and sub-contractors base their employment decisions on the same, thus eliminating affirmative action employment decisions. There are a number of review and reporting requirements that are outlined and may impact Federal agencies, contractors, and sub-contractors depending upon the findings. Unfortunately, the full impact of this Executive Order may not be known for quite some time. 

    In addition to the rollback on DE&I initiatives, the Trump administration has rolled back a number of Executive Orders implemented by previous administrations including EO13988: Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation. We will have to wait and see how this recension plays out given the fact that the Supreme Court ruled in Bostock v. Clayton County, GA (2020) that Title VII of the Civil Rights Act protects from discrimination on the basis of gender identity and sexual orientation. 

    While this is a very brief overview, more information on employment law updates in 2025 (and what may be to come) can be found at the resources below:  


    A Note From Our Team

    Horizon Point believes in diverse, equitable, and inclusive workplaces. We believe that the most successful, thriving businesses are those who value People First and create a sense of belonging for those they employ and serve.

    We will continue to support our clients in driving the workplace forward through innovative people practices: our compensation plans address pay equity, our training programs are designed for diverse learning needs, and our engagement services focus on inclusion and development of all people in the workplace. To learn more about our work in these areas, read these stories from our team:

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