January 29, 2026 2026 Labor and Employment Outlook for Manufacturers

Several significant employment law developments and trends are on the horizon, especially with regard to local and state laws.

By Abby M. Warren and Christopher A. Costain

As we look ahead to 2026, significant employment law developments are expected to impact everything from technology to employee relations to a revived National Labor Relations Board. 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.

About the Authors:

Abby M. Warren focuses her practice on counseling private sector employers, including multi-national corporations, restaurants and hospitality employers, and manufacturers, in all areas of employment law and defending employers in court and before administrative agencies. She is a member of Robinson+Cole’s Labor and Employment Group.

Christopher A. Costain counsels clients across numerous industries including hospitality and manufacturing in employment law and human resource workplace matters and defends employers in court and before administrative agencies. He is a member of Robinson+Cole’s Labor and Employment Group.

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