Opinion: Key federal developments in employment law employers should know

Lynne Haggerman

Several significant federal developments have emerged in early 2026 regarding civil rights enforcement, workplace harassment guidance, wage and hour interpretations, and scrutiny of diversity, equity and inclusion programs. These changes affect entities receiving federal funds, employers navigating harassment policies, compliance with the Fair Labor Standards Act and organizations with DEI initiatives. Businesses should review relevant policies and practices to ensure alignment with current federal priorities and minimize compliance risks.

1. DOJ final rule on Title VI enforcement. The U.S. Department of Justice issued a final rule in December 2025 that eliminates disparate-impact liability under Title VI of the Civil Rights Act of 1964. Title VI prohibits discrimination on the basis of race, color, sex, religion or national origin.

Historically, the DOJ enforced Title VI to address both intentional discrimination and disparate-impact claims, where neutral policies or practices disproportionately affect protected groups even without discriminatory intent. The new rule shifts enforcement to focus solely on intentional discrimination, aligning with the statutory text, U.S. Supreme Court precedent and the principle of equal treatment under the law. The DOJ will no longer pursue disparate-impact enforcement actions.

Affected companies should review employment-related policies previously implemented pertaining to disparate-impact concerns. Training and compliance materials should emphasize intentional discrimination rather than disparate-impact liability. While the DOJ’s enforcement priorities have narrowed, other agencies’ rules for employment under Title VII remain in effect, and private parties may still pursue disparate-impact claims under applicable statutes.

2. EEOC rescinds 2024 harassment guidance. On Jan. 22, the U.S. Equal Employment Opportunity Commission rescinded its comprehensive 2024 Enforcement Guidance on Harassment in the Workplace. This guidance, which provided nearly 200 pages of detailed instructions and over 70 examples, represented the agency’s most extensive changes in more than two decades concerning this topic. The rescission removed the EEOC’s interpretation of Title VII, and organizations must now assess any pronoun usage and access to bathrooms policies using Title VII, court decisions and privacy concerns.

3. EEOC enforcement action against Nike on DEI practices. On Feb. 4, the EEOC filed a subpoena enforcement action in Missouri federal court against Nike Inc., seeking information related to allegations of systemic race discrimination against white employees, applicants and training participants.

The EEOC highlights Nike’s employment policies and practices favoring racial and ethnic minorities over whites. This action signals heightened federal scrutiny of DEI programs and marks the beginning of broader enforcement targeting race-based DEI practices. Employers with similar programs need to promptly review policies and practices.

4. Wage and Hour Division issues FLSA opinion letters. The Wage and Hour Division of the U.S. Department of Labor issued several opinion letters in early January interpreting the Fair Labor Standards Act. These letters address exempt status after pay changes, performance bonuses in overtime calculations, mandatory preshift activities and commission exemptions. First, the WHD emphasized that businesses may classify exempt workers as nonexempt, but cannot misclassify nonexempt employees as exempt. Second, nondiscretionary incentive bonuses tied to attendance, safety, attire and efficiency must be included in the regular rate of pay for overtime calculations. Third, mandatory preshift roll call for 911 dispatchers under a collective bargaining agreement qualifies as compensable work time. Fourth, retail/service companies must use the federal minimum wage, not higher state rates, for the commission exemption threshold. Tips may partially count toward the greater-than-50% commission test if a tip credit applies.

Organizations should review employee handbooks, policies, procedures, processes and forms regarding pay practices, civil rights enforcement, harassment prevention and DEI initiatives to ensure alignment with these developments. Consulting legal counsel is advisable to address specific risks and obligations.

Lynne Haggerman holds a master of science in industrial organizational psychology and is president/owner of Lynne Haggerman & Associates LLC, specializing in management training, retained search, outplacement and human resource consulting. She can be reached at lynne@lynnehaggerman.com.