The Cases Quietly Reshaping Employment Law in 2026

Employment law rarely makes headlines unless a case involves a famous plaintiff, a shocking dollar amount, or a ruling that maps neatly onto a culture war. The developments that actually matter for workers and employers most of the time — the doctrinal shifts, the regulatory reversals, the state-by-state legislative churning — move through the legal system with little fanfare, and then arrive on HR desks and employment lawyers’ caseloads as sudden new realities.

2026 is already a year of significant reconfiguration. The Supreme Court’s 2025 ruling in Ames v. Ohio is rippling through employment discrimination practice. The NLRB has been operationally destabilized in ways that are still unresolved. Non-compete enforcement has fractured between an abandoned federal rulemaking and a patchwork of increasingly aggressive state laws. And the EEOC has pivoted its enforcement focus in ways that are creating new litigation risk for employers who didn’t update their DEI programs fast enough. None of this has gotten the attention it deserves. Here’s what’s actually happening.

Key Takeaways

• The Supreme Court’s unanimous June 2025 ruling in Ames v. Ohio Department of Youth Services eliminated the “background circumstances” requirement for majority-group plaintiffs in Title VII cases, resolving a circuit split and opening the door to an expected increase in discrimination claims from members of historically dominant groups.
• The NLRB spent much of 2025 without a functioning quorum, reinstated its 2020 joint employer standard in February 2026, and now faces a possible Supreme Court ruling on whether Congress can constitutionally bar the President from removing board members without cause — a decision that could fundamentally reshape independent agency governance.
• The FTC’s sweeping non-compete ban never took effect and was effectively abandoned in September 2025. In the vacuum, state legislatures are moving aggressively — Virginia just signed legislation largely banning non-competes for all employees by tying enforceability to severance payments, effective July 1, 2026.
• The EEOC has sharply pivoted under the Trump administration, scrutinizing employer DEI programs as potentially illegal and sending letters to 500 of the largest companies in the country questioning their Title VII compliance — even while the Supreme Court ruled in Ames that Title VII applies uniformly to everyone.
• California enacted AB 288, a backstop law allowing PERB to hear private-sector labor disputes if the NLRB fails to act within six months — a direct response to NLRB dysfunction that courts have temporarily enjoined on federal preemption grounds, with Washington State passing a similar law.
• A new Department of Labor proposed rule on joint employer status under the FLSA, FMLA, and MSPA signals significant compliance exposure for any business using staffing agencies, contractors, or franchise arrangements.

Ames v. Ohio: Title VII’s New Unified Standard

The most consequential Supreme Court employment ruling in years arrived quietly on June 5, 2025. In Ames v. Ohio Department of Youth Services, Justice Ketanji Brown Jackson wrote for a unanimous Court, holding that majority-group plaintiffs are not required to demonstrate “background circumstances” to establish a prima facie case of employment discrimination under Title VII.

The case turned on a rule applied by the Sixth Circuit and several other circuits that required employees from majority groups — white workers, heterosexual workers, men — to clear an extra evidentiary hurdle when alleging discrimination: they had to show “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.” Marlean Ames, a heterosexual woman who alleged she was denied a promotion and later demoted in favor of LGBTQ+ colleagues, couldn’t meet that threshold and lost at both the district court and appellate levels.

The Supreme Court reversed unanimously. The reasoning is straightforward: Title VII prohibits discrimination against “any individual” because of a protected characteristic. The statute draws no distinction between majority and minority plaintiffs. Imposing a categorical extra burden based solely on a plaintiff’s group membership — requiring more proof simply because of who the plaintiff is — contradicts the statute’s plain text and the Court’s own precedents.

The practical consequences are already unfolding. Employers in the Sixth, Seventh, Eighth, Tenth, and D.C. Circuits — where the background circumstances rule had been applied — will find it harder to obtain early dismissal of discrimination claims brought by members of majority groups. Plaintiffs who previously couldn’t survive summary judgment under the heightened standard can now proceed under the standard framework. The prediction across employment law practices is an increase in what were historically called “reverse discrimination” claims, though Ames itself suggests this framing is now legally obsolete: there is simply discrimination, and Title VII covers all of it.

The ruling carries an additional undercurrent worth watching. In a concurrence joined by Justice Gorsuch, Justice Thomas questioned whether the McDonnell Douglas burden-shifting framework itself — the foundational analytical structure used in most employment discrimination cases — remains a useful tool or should be reconsidered. Describing it as a “judge-made evidentiary tool” with “no basis in the text of Title VII,” Justice Thomas’s invitation to future litigants may prove as significant as the Ames holding itself over the coming years.

The NLRB: An Agency in Structural Crisis

The National Labor Relations Board is currently functioning — barely — after a year of extraordinary dysfunction. The core problem is constitutional and political simultaneously.

In early 2025, President Trump removed NLRB member Gwynne Wilcox and Acting General Counsel Jennifer Abruzzo, reducing the Board below its quorum threshold. Without a quorum, the NLRB cannot issue decisions in unfair labor practice appeals, cannot resolve union election disputes, and cannot make new policy. Employers in industries with active organizing drives and pending Board cases found themselves in a legal limbo with no resolution timeline.

The D.C. Circuit Court of Appeals held in December 2025 that Congress cannot constitutionally bar the President from removing NLRB members without cause — a ruling that directly challenged the long-standing framework under Humphrey’s Executor v. United States (1935), which permits Congress to create independent agencies whose members are insulated from at-will presidential removal. The Supreme Court has separately agreed to consider whether Humphrey’s Executor should be overruled in a pending FTC case. The outcome of that proceeding could fundamentally alter the legal structure of every independent federal agency, not just the NLRB.

The Board restored a working quorum in early 2026, and on February 26, 2026, formally reinstated its 2020 joint employer standard, reverting from the broader 2023 Biden-era rule. Under the reinstated 2020 standard, a business is a joint employer only if it “possesses and exercises substantial direct and immediate control” over at least one essential term or condition of employment. The 2023 rule — which would have treated indirect or potential control as sufficient — was vacated before taking effect and is now effectively shelved.

Meanwhile, Acting General Counsel William Cowen rescinded over 25 guidance memoranda previously issued by Abruzzo on topics including electronic surveillance of employees, non-compete agreements, and enhanced remedies in unfair labor practice settlements. A new General Counsel memorandum directs Board regions to pursue settlement “based solely on the maintenance of potentially unlawful rules” as inefficient — a direct departure from Biden-era enforcement posture. Non-compete clauses, confidentiality agreements, and non-disparagement provisions that Abruzzo had argued were presumptively unlawful under the NLRA are now in a more permissive enforcement environment.

The Sixth Circuit added another dimension in March 2026, vacating a bargaining order in Brown-Forman Corp. v. NLRB on the grounds that the Board had exceeded its authority by establishing a new union recognition standard through adjudication that conflicted with prior precedent. The court found the Board had lowered the threshold for union recognition in a way that wasn’t necessary to resolve the case before it. For employers in the Sixth Circuit, this limits the Board’s ability to issue bargaining orders following pre-election unfair labor practices — but whether other circuits will follow remains an open question.

Non-Competes: Federal Retreat, State Advance

The FTC’s attempt at a comprehensive national ban on non-compete agreements is over. The rule was blocked by a federal district court in August 2024, appealed, and then the FTC quietly dropped its appeal in September 2025. FTC Chairman Andrew Ferguson announced the agency would pursue enforcement case-by-case rather than through broad rulemaking — effectively leaving the non-compete landscape to state law, where it had always primarily resided.

State legislatures have not been idle. The most significant 2026 development is Virginia’s SB 170, signed into law April 13, 2026 by Governor Abigail Spanberger and effective July 1, 2026. The law makes non-compete agreements unenforceable against any employee — not just low-wage workers — who is discharged without cause, unless the employer provides severance benefits or other monetary payment, disclosed at the time of the agreement’s execution. The law doesn’t define “cause,” doesn’t set a minimum severance amount, and doesn’t specify what qualifies as a sufficient monetary payment — questions that Virginia courts will now spend years working through.

Virginia also separately prohibited non-compete agreements for health care professionals (with narrow exceptions), and a January 2026 Court of Appeals ruling in Sentry Force Security, LLC v. Barrera extended Virginia’s existing low-wage restrictions to employee non-solicitation clauses — meaning employers can’t prevent nonexempt former employees from recruiting their former coworkers to a competitor.

Washington State has raised its non-compete threshold for employees to $126,858.83 annually and for independent contractors to $317,147.09. Utah has banned non-compete agreements for all health care workers entirely effective May 6, 2026. Pending legislation in Connecticut, Illinois, and New Jersey would further restrict enforcement, in some cases to employees earning up to $300,000.

The pattern across states is consistent: income thresholds for permissible non-competes are rising, health care and other professional categories are being carved out categorically, and the total enforceability window is narrowing. Employers operating across multiple jurisdictions increasingly cannot maintain a single non-compete template — what works in Texas doesn’t work in Virginia, and what works in Virginia as of June 30, 2026 won’t work there on July 1, 2026.

The EEOC’s DEI Pivot and Its Collision with Ames

One of the stranger features of the current employment law landscape is that the Supreme Court’s Ames ruling — holding that Title VII protects everyone equally without regard to majority or minority status — has arrived simultaneously with an EEOC enforcement agenda that is, in the view of some employment lawyers, reading that principle in a maximally aggressive direction against employer DEI programs.

The EEOC sent letters to 500 of the largest employers in the United States questioning their Title VII compliance and flagging potentially “illegal” DEI initiatives — a signal that the agency views many diversity hiring and promotion programs as discriminating against majority-group employees. The EEOC has simultaneously deprioritized claims based on “disparate impact” (policies that affect protected groups disproportionately even without discriminatory intent) in favor of direct challenges to employer diversity policies.

The EEOC’s 2025 performance report flagged DEI 14 times and emphasized “anti-American bias” in hiring — a framing that puts employers who expanded diversity programs in the past several years in a difficult position. Programs carefully designed to be legally defensible under prior EEOC guidance may now draw scrutiny from the same agency that issued that guidance.

The Ames ruling itself is more nuanced than the EEOC’s current posture implies. Employment lawyers across the ideological spectrum have noted that the ruling resolves a procedural question — who must show what at the threshold pleading stage — without changing the substantive standards that determine whether discrimination actually occurred or what defenses employers can raise. As Littler’s analysis notes, well-documented inclusion initiatives that don’t rely on protected characteristics in individual employment decisions remain defensible under Title VII. The ruling opens the courthouse door slightly wider for majority-group claims; it doesn’t automatically invalidate programs that survived scrutiny before.

The tension between the EEOC’s enforcement posture and what the statute actually requires will generate litigation throughout 2026. Employers are navigating this without settled guidance, in real time.

The Joint Employer Problem Expands

The DOL’s April 2026 proposed rule on joint employer status — covering the FLSA, FMLA, and the Migrant and Seasonal Agricultural Worker Protection Act — is the most broadly applicable regulatory development of the year for large employers. The proposed rule addresses “horizontal” joint employment (multiple associated employers sharing a workforce) and “vertical” joint employment (a business exercising control over workers formally employed by a staffing agency or subcontractor).

Unlike the Trump administration’s 2020 NLRB joint employer standard — which requires direct and immediate control — the DOL’s proposed FLSA rule takes a broader view, examining indirect or potential control, economic dependence, and the totality of the business relationship. This creates a divergence: the same company could be found not to be a joint employer under NLRB law for collective bargaining purposes but could be found a joint employer under FLSA for wage-and-hour liability. That asymmetry is operationally significant for any business using significant numbers of contractors, subcontractors, or staffing agency workers.

What Practitioners Are Watching

Several developments that haven’t yet resolved will define employment law’s trajectory through the end of the year and into 2027.

The most significant pending question is the Supreme Court’s forthcoming ruling on whether Humphrey’s Executor — the 1935 precedent permitting Congress to insulate independent agency members from at-will removal — should be overruled. If the Court narrows or eliminates that precedent, it won’t just affect the NLRB. It affects the FTC, the SEC, the FCC, and every other multi-member independent agency. Employment law is downstream of that structural question.

The California PERB backstop law (AB 288) and Washington’s analogous measure are being challenged on federal preemption grounds. If courts ultimately permit these state-level labor relations backstops to operate, it would create a framework in which states with strong labor law traditions could effectively substitute for federal enforcement when the NLRB goes dormant — a development with enormous implications for the fragmented federal-state labor relations system that has existed since the NLRA’s passage in 1935.

And Justice Thomas’s Ames concurrence questioning McDonnell Douglas may prove to be the sleeper development of 2025. If the Court agrees to revisit the evidentiary framework that has structured employment discrimination litigation for fifty years, virtually every aspect of employment discrimination practice will need to be rebuilt.

The changes already in effect are significant. The cases quietly working their way through courts and agencies may prove more significant still.

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