The Latest – EEO-1 Rescission, Connecticut’s New AI Law, And The Faster Labor Contracts Act (May 2026)

Jenny Kiesewetter is a practicing ERISA and employee benefits attorney who partners with HR teams on a wide range of workplace compliance matters — from benefit-plan obligations to day-to-day HR policies and regulatory requirements. Her guidance helps employers spot risks early, navigate regulatory change, and make informed decisions that support both employees and the organization.

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Federal agencies, state legislatures, and the U.S. House of Representatives all moved on workforce policy this month. The Equal Employment Opportunity Commission filed paperwork to scrap EEO-1 reporting altogether. New Jersey finalized its long-debated worker classification rules. Connecticut passed one of the most far-reaching state AI laws in the country, and the House cleared a procedural hurdle that forces a vote on a major union bargaining bill. Each of these arrived within a three-week window, and each one touches a different part of the HR portfolio.

Here is what to track now.

Effective Date: Proposal submitted to the Office of Information and Regulatory Affairs (“OIRA”) on May 14, 2026.

What’s Changing:

On May 14, 2026, the Equal Employment Opportunity Commission (EEOC) submitted a proposed rule to OIRA seeking to rescind the EEO-1, EEO-3, EEO-4, and EEO-5 reporting requirements. The filing is a proposal under OIRA review, not a final rule; if finalized it would end the federal government’s decades-long collection of workforce demographic data on race, ethnicity, and sex from covered employers. The EEOC has used EEO-1 data for decades to identify demographic disparities, guide investigations, and analyze workforce composition by industry and region.

EEOC Chair Andrea Lucas has repeatedly argued that Title VII of the Civil Rights Act of 1964 contains no “diversity exception,” and the rescission proposal tracks the administration’s broader effort to limit federal collection of demographic data tied to employment. OIRA must complete its review, and the Office of Management and Budget must then publish the proposed rule in the Federal Register for public comment. As of the filing date, the EEOC has not announced the 2026 EEO-1 filing window; employers should treat portal and filing status as subject to change while the rulemaking proceeds.

HR Takeaway

Employers covered by EEO-1 reporting should not destroy demographic data or stop collecting it. The proposal could be withdrawn, modified, or struck down in court, and several state pay-data and reporting laws still require similar underlying demographic data.

• Continue collecting voluntary self‑identification data from new hires and applicants.
• Preserve historical EEO-1 reports and the underlying data. Some state pay-data filings (for example in California and Illinois) still require comparable demographic information even if a federal rescission moved forward.
• Watch for the proposed rule’s publication in the Federal Register; the comment period will be the primary opportunity to flag operational concerns about rescission timing.

Effective Date: Final rule adopted May 5, 2026; operative October 1, 2026, following publication in the New Jersey Register and a 120‑day phase‑in.

What’s Changing:

The New Jersey Department of Labor and Workforce Development adopted final regulations on May 5, 2026, that clarify how the state’s ABC test applies when classifying a worker as an employee or an independent contractor. The rules become operative October 1, 2026 and are expected to apply across roughly 1.7 million independent contractor relationships statewide (per external estimates; the Department’s press release does not cite this exact figure).

To classify a worker as an independent contractor under New Jersey law, the employer carries the burden of proving all three prongs of the ABC test:

(A) the worker is free from control over how the work is performed (both under contract and in fact);

(B) the work falls outside the usual course of the company’s business or is performed away from the company’s places of business; and

(C) the worker is customarily engaged in an independently established trade or business of the same nature.

The regulations identify specific non‑exhaustive factors for Prongs A and C, which employers should reference when auditing relationships. The final regulations apply uniformly to every program the Department administers, including New Jersey’s Unemployment Compensation Law, Wage and Hour Law, and Wage Payment Law. One important point: a written contract labeling a worker an independent contractor will not control the analysis, especially when the company drafted the contract and the worker had no meaningful ability to negotiate it.

HR Takeaway

New Jersey employers who use independent contractors should audit those relationships now, well before October 1, 2026.

• Map every contractor relationship by role, project type, and pay structure.
• Document the specific evidence supporting each prong of the ABC test, including the factors listed in the final rule for Prongs A and C. The contract alone will not satisfy state regulators.
• Coordinate with employment counsel on reclassification strategy for relationships that cannot meet all three prongs.

Effective Date: Connecticut Senate Bill 5 passed the legislature on May 1, 2026; Governor Ned Lamont is expected to sign. The anti‑discrimination amendment takes effect October 1, 2026, and the operative employer‑notice and AEDP‑governance provisions take effect October 1, 2027.

What’s Changing:

Connecticut passed the Artificial Intelligence Responsibility and Transparency Act (Senate Bill 5). The bill was approved by the Senate on April 21, approved by the House on May 1, and sent to Governor Ned Lamont, who has indicated he will sign it.

The law regulates employers that use “automated employment‑related decision processes” (AEDPs) in recruiting, hiring, promotion, discipline, termination, and related decisions. An AEDP is any computational process that generates an output used or as a substantial factor in an employment decision and is not a mere record‑keeping or internal‑analytics function. Scheduling, performance management, productivity monitoring, and reduction‑in‑force tools can all qualify.

Employers must give affected employees and applicants plain‑language notice that an AEDP will be or was used in the decision, unless the use is obvious. When an AEDP contributes to an adverse employment decision, the employer must provide a written statement explaining the principal reasons for the decision, the AEDP’s role, the type and source of data used, and the affected person’s right to correct any personal data they did not provide. The law amends Connecticut’s discrimination statute to cover AEDP‑caused discriminatory effects and states that reliance on an AEDP is not a defense. The Connecticut Attorney General is the primary enforcer under the Unfair Trade Practices Act, with a 60‑day cure period for certain early violations; the Commission on Human Rights and Opportunities continues to handle discrimination claims.

HR Takeaway

Connecticut joins Colorado, California, Illinois, and New York City in regulating AI-driven employment decisions. Each state’s framework is different, and the burden falls on multistate employers to track each one.

• Inventory every tool that touches a hiring, scheduling, performance, or termination decision and identify which qualify as an AEDP under Connecticut’s definition.
• Build a plain-language notice template and an adverse-action explanation process before October 1, 2027.
• Document anti-bias testing for any AEDP in active use. Connecticut courts will weigh that evidence when assessing discrimination claims.

Effective Date: Discharge petition reached the required 218 signatures on May 20, 2026; House floor vote to be scheduled.

What’s Changing:

On May 20, 2026, Representative Donald Norcross’s discharge petition for the Faster Labor Contracts Act reached the 218 signatures needed to force a House floor vote. The bill would amend the National Labor Relations Act to compress the timeline between a successful union election and a first contract. Workers currently wait an average of 458 days for a first contract after voting to unionize.

Under the bill, an employer would have to begin bargaining within 10 days of certification. If no agreement is reached after 90 days of bargaining, the dispute would move to federal mediation. If mediation fails after a 30‑day period, the parties would proceed to binding interest arbitration and a government‑imposed initial contract. The bill has bipartisan support, with several House Republicans signing the discharge petition alongside Democratic colleagues, and major unions including the Teamsters, the International Association of Machinists, and the AFL‑CIO pushing for passage. Industry groups including the Independent Electrical Contractors have mobilized in opposition, arguing that binding interest arbitration replaces voluntary negotiation with a government‑imposed contract. A House floor vote will follow in the coming weeks, though the bill’s path through the Senate is uncertain.

HR Takeaway

Employers in industries that have seen organizing activity over the past five years, including warehousing, manufacturing, retail, hospitality, and healthcare, should prepare for a first-contract timeline that could run in months rather than years.

• Brief leadership on the timeline structure: 10‑day bargaining trigger, 90 days of bargaining, 30 days of mediation, then binding arbitration culminating in a government‑imposed contract.
• Update labor-relations planning to account for arbitration as a real possibility, not a remote one.
• Engage experienced labor counsel before any organizing campaign begins. The bill, if enacted, would compress the negotiating window dramatically.

Effective Date: Fourth Circuit decision issued April 17, 2026 (Milligan v. Merrill Lynch, 25‑1385).

What’s Changing:

The Fourth Circuit held that Merrill Lynch’s WealthChoice Award program is a non‑ERISA bonus plan, not a pension plan, and therefore falls outside ERISA. The program is a long‑term incentive award for top‑performing Financial Advisors with an eight‑year vesting schedule. A former advisor who resigned and lost unvested awards sued under ERISA, arguing the plan was a pension arrangement; the court affirmed dismissal.

The opinion laid out a non‑exhaustive six‑factor test for distinguishing bonus plans from pension plans, focusing on heightened eligibility, whether the plan is funded with money employees would otherwise receive immediately, real vs. phantom investments, deferral to termination, retirement‑style framing, and firm‑performance linkage, and emphasized that the vast majority of payouts go to current employees, not retirees.

The court also reaffirmed that the DOL’s bonus‑plan exclusion from ERISA’s pension definition remains valid even under the newer Supreme Court framework in Loper Bright Enterprises v. Raimondo, which limits how much courts must defer to agency interpretations of ambiguous statutes.

HR Takeaway

Compensation teams and ERISA counsel can rely on the Fourth Circuit’s framework when designing long‑term incentive, deferred bonus, or retention awards intended to sit outside ERISA.

• Review existing long‑term incentive and deferred bonus plans against the six‑factor test.
• Document the business purpose of any award program with a multi‑year vesting schedule; plans presented as retirement vehicles or that systematically push payment to termination remain at risk.
• Update plan language and participant communications to avoid retirement‑style framing for what is intended to function as a bonus.

HR teams face competing federal, state, and court-driven changes, and waiting for clarity is not a strategy. Act on what is operational now. Continue EEO-1 data collection. Move forward with New Jersey contractor audits. Start Connecticut AI inventories. Revisit labor-relations strategy in organizing-heavy industries. Align compensation design with the Fourth Circuit’s framework.

Act now on what you can control. Each of these developments includes at least one step you can take to reduce risk — no matter how the rest plays out.

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