Employment Law Update for 2026 (Quick Guide)

1. AI & Employment Discrimination

• States taking action: CA, CO, IL, NJ
• Highlights:
  • New Jersey: existing anti-discrimination laws apply to AI, without new legislation
  • California & Illinois: prohibited discriminatory AI use; CA adds record-keeping & bias-testing safe harbor; IL requires employee notification
  • Colorado (eff. June 30, 2026): high-risk AI systems must be bias-audited; public disclosure if discrimination is detected

2. Portable Benefits for Independent Contractors

• Alabama joins Tennessee & Utah in allowing voluntary portable benefits for 1099’s, without creating an employment relationship
• Includes tax incentives for employer contributions and contractor purchases
• Pennsylvania & Georgia: already have pilot programs
• Other states exploring legislation: MA, MN, NJ, VA, WI

3. Minimum Hourly Wage Rate Increases

• Dozens of states will see increases:

AZ – $15.15	CA – $16.90	CO – $15.16	CT – $16.94	HI – $16.00
ME – $15.10	MI – $13.73	MN – $11.41	MO – $15.00	MT – $10.85
NE – $15.00	NJ –$15.92	OH – $11.00	NY – $16	VT – $14.42
VA – $12.77	WA – $17.13

• These localities will also see increases:

Boulder (CO) – $16.82, Boulder County (CO) – $17.99, Denver (CO) – $19.29, Edgewater (CO) – $18.17, Minneapolis (MN) – $16.37, New York City (NY) – $17, Suffolk County (NY) – $17, Westchester County (NY), – $17, Seattle (WA) – $21.30.

4. Non-Compete Salary Thresholds Rising

• States including CO, ME, MD, OR, RI, WA, D.C. will increase thresholds for “highly compensated employees” (HCEs).
• Employers should review existing non-competes and new agreements to ensure validity in 2026.

5. Paid Family & Medical Leave (PFML)

• Expansions in 2026: CO, RI, WA
  • CO: +12 NICU care weeks
  • RI: Temporary Caregiver Insurance from 7 → 8 weeks
  • WA: expands job protection to employers with 25+ employees; no minimum hours; 180-day eligibility

6. Pay Stub Updates

• Oregon: Employers must provide detailed written explanations of all potential earnings & deductions at hire; update annually

7. Safe Harbor for Non-Resident Workers

• Alabama joins IL, IN, MT: nonresidents working ≤30 days/year may qualify for exemption from state income tax & withholding
• Some other states (LA, ND, UT, WV) already have day-based thresholds with mutuality requirements — the worker’s home state must have a similar exemption

Note:

California has several new employment law changes taking effect in 2026 that were not included in this article.

 

Sources:

·      https://www.jdsupra.com/legalnews/new-year-new-employment-laws-what-takes-3516201

·      https://www.mercatus.org/research/policy-spotlights/bringing-portable-benefits-americas-independent-workforce-overview

·      https://www.seyfarth.com/news-insights/legal-update-new-illinois-ai-law-requires-employee-notice-affirms-existing-employer-nondiscrimination-duties

·      https://www.sixfifty.com/blog/key-employment-law-changes-for-jan-1st-2026/

  By Samantha Brinkley, MA