Compliance Round Up – Labor Market Shifts, Joint Employer Rule Changes, and Workplace Policy Developments Employers Need to Know (March 2026)

Headshot of Jennifer Kieswetter
Written By
Jennifer Kiesewetter
Published On: March 10, 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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March opened with several developments that HR teams should already have on their radar. A new jobs report raised questions about labor market momentum. At the same time, federal agencies and state legislatures continued adjusting workplace rules affecting diversity, equity, and inclusion programs, employee leave, workplace communications, and confidentiality agreements.

Taken together, these developments reflect the environment employers are navigating throughout 2026. Compliance responsibilities now move across several fronts at once. Economic conditions influence workforce planning. Federal agencies continue refining regulatory standards. States continue expanding workplace protections and regulatory oversight.

For HR leaders, the challenge is not responding to a single sweeping change. It is keeping policies, training, and internal processes aligned as multiple developments unfold throughout the year.

Federal News

Effective Date:  March 2026 Jobs Report Release

What’s Changing:

The most recent U.S. jobs report showed a net loss of approximately 92,000 jobs, surprising economists who had anticipated modest job growth. While monthly employment reports often fluctuate, the data suggest that hiring momentum may be slowing after several years of strong job creation.

Several industries reported reduced hiring activity, and workforce participation levels reflected a more cautious labor market environment. Analysts also noted that some employers appear to be reassessing hiring plans amid persistent economic uncertainty and elevated borrowing costs.

Although a single report does not establish a long-term trend, it signals that the labor market may be entering a period of slower growth.

What This Means for HR:

HR teams may see shifts in recruiting dynamics if hiring slows in certain industries. Candidate pipelines could expand slightly, but employers should not assume that talent shortages have disappeared.

Workforce planning remains important. Employers should also maintain careful documentation when making workforce adjustments, including reductions in force or restructuring decisions, as economic conditions evolve.

Effective Date: February 27, 2026

What’s Changing?

In February, the National Labor Relations Board reinstated the 2020 joint employer standard, returning to a framework that focuses on direct and immediate control over essential terms and conditions of employment.

Under this standard, a company generally qualifies as a joint employer only when it exercises substantial direct control over matters such as wages, hours, hiring, supervision, or discipline. Indirect influence or contractual authority alone typically does not establish joint employer status.

This decision narrows the broader interpretation applied in recent years and reduces the likelihood that businesses will be deemed joint employers based solely on indirect involvement.

What This Means for HR:

Employers that rely on staffing agencies, contractors, or franchise structures should review their operational practices and service agreements. Contract language alone does not determine joint employer status. Day-to-day management practices may also create risk.

HR teams should ensure managers understand the limits of supervising or directing workers who outside vendors or staffing partners employ.

Effective Date: February 26, 2026 Proposed Rule

What’s Changing?

On February 26, 2026, the U.S. Department of Labor proposed a new rule titled “Employee or Independent Contractor Status Under the Fair Labor Standards Act, Family and Medical Leave Act, and Migrant and Seasonal Agricultural Worker Protection Act.”

The proposal is intended to clarify how employers should distinguish between employees and independent contractors under federal wage and hour laws. The Department is revisiting how the economic realities test applies to modern work arrangements, including gig work, freelance services, and contractor-based roles.

The proposal continues to focus on familiar factors such as the degree of control exercised by the employer, the worker’s opportunity for profit or loss, and whether the work performed is integral to the business.

The rulemaking process remains in its early stages. However, the proposal signals that worker classification continues to be an enforcement priority for the Department of Labor.

What This Means for HR:

Worker classification continues to draw scrutiny from regulators. Employers that use independent contractors should take a closer look at those relationships and confirm that arrangements reflect genuine contractor status under current law.

Clear documentation helps. Contracts, business records, and other materials that show the contractor operates an independent business and controls how the work is performed can help support the classification if questions arise.

Effective Date: February 11, 2026

What’s Changing?

On February 11, 2026, the Equal Employment Opportunity Commission (EEOC) and the Office of Personnel Management (OPM) issued guidance addressing telework accommodations in the federal sector.

Although the guidance formally applies to federal agencies under the Rehabilitation Act, the guidance pulls together pre- and post-pandemic case law and explains how existing accommodation rules apply when employees request remote work. 

As a result, private employers may find the guidance helpful when evaluating telework requests as they implement or refine return-to-office policies.

What This Means for HR:

Accommodation requests involving remote work will likely continue. HR teams should ensure managers understand the interactive process and document the factors used when evaluating accommodation requests.

Clear job descriptions and accurate identification of essential job functions remain central to determining whether remote work is a feasible accommodation for a particular role.

Trending State News

Effective Date: October 1, 2026

What’s Changing: 

On February 18, 2026, Governor Kay Ivey signed Senate Bill 30, known as “Trey’s Law,” which restricts the use of confidentiality agreements that prohibit the disclosure of sexual abuse.

Starting October 1, 2026, employers cannot enforce confidentiality provisions that prevent someone from disclosing allegations of sexual abuse. The restriction applies only to provisions tied to sexual abuse claims. Other parts of an agreement, such as compensation or general settlement terms, may still remain confidential.

The law reflects a broader shift across several states that are limiting the use of nondisclosure agreements in cases involving misconduct.

What This Means for HR:

Employers should review employment agreements, settlement agreements, and confidentiality provisions to ensure they comply with new state restrictions.

HR professionals who handle workplace investigations or settlement discussions should work with legal counsel before including confidentiality language in those agreements.

Effective Date: Proposed legislation passed by the Arizona House of Representatives on February 23, 2026; pending consideration by the Senate

What’s Changing?

Arizona lawmakers are considering legislation that would restrict certain diversity, equity, and inclusion initiatives within government entities and organizations receiving public funding.

The proposal focuses on training programs or workplace policies that require participation in discussions on race, gender, or identity. Supporters argue the measure would prevent ideological bias in workplace programs. Critics contend that the legislation could limit employer diversity initiatives.

The bill, HB 2135, would also create a new area of potential liability for covered entities, including employers. The legislation sets a minimum damages threshold of at least $100,000 and would allow prevailing plaintiffs to seek declaratory relief, injunctive relief, compensatory damages, court costs, and reasonable attorneys’ fees. Claims could be brought within a three-year statute of limitations.

The bill remains under legislative review and may change as it moves through the process.

What This Means for HR:

Employers operating in multiple states will begin to see different approaches to regulating diversity and inclusion programs. HR teams should review training materials, participation expectations, and related policies to confirm they still comply with state law.

HR leaders should also evaluate how those state restrictions interact with federal nondiscrimination obligations and the organization’s broader workplace policies.

Effective Date: Amendments enacted on February 13, 2026, extending the effective date until December 19, 2026.

What’s Changing: 

New York enacted amendments to the law commonly known as the “Trapped at Work Act,” delaying the law’s effective date to December 19, 2026. Governor Kathy Hochul signed the amendments, Assembly Bill A9452, on February 13, 2026. The law was originally signed in December 2025.

The amendments clarify aspects of the statute while maintaining the law’s central restriction: employers may not require employees or job applicants, as a condition of employment, to execute an employment promissory note. The law addresses practices that could leave workers financially obligated to an employer if they leave their job.

Although the amendments refine portions of the statute, employers should still expect scrutiny of agreements that impose repayment obligations tied to employment.

What This Means for HR:

HR teams should review training sessions, town hall meetings, and workplace communications to confirm that participation requirements comply with the law.

Employers should also clearly document the business purpose of meetings and training sessions, particularly when discussing topics that could be interpreted as political or ideological.

Around the Courts

Effective Date: February 6, 2026 appellate ruling

What’s Changing:

On February 6, 2026, a three-judge panel of the U.S. Court of Appeals for the Fourth Circuit vacated a district court’s preliminary injunction that had blocked portions of two executive orders issued by President Donald Trump addressing diversity, equity, and inclusion (DEI) initiatives.

The case has moved through several stages. In February 2025, a federal district court in Maryland issued a preliminary injunction that prevented enforcement of certain provisions of the executive orders. The Fourth Circuit later allowed those provisions to take effect while the appeal moved forward. The February 2026 ruling formally lifted the earlier injunction.

The orders focus on limiting certain DEI programs within federal agencies and federal contracting environments. With the injunction removed, those provisions may move forward while the broader legal challenge continues. The case, National Association of Diversity Officers in Higher Education v. Trump, remains ongoing and additional rulings are likely as the litigation progresses.

What This Means for HR:

Federal contractors and employers that work closely with government agencies should monitor developments closely. Policies and training programs related to diversity initiatives may face increased scrutiny as the legal challenges continue.

HR teams should also watch for additional court rulings that clarify how executive branch policies intersect with workplace training and compliance obligations.

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