The Latest – Labor Market Signals, Federal Guidance, Immigration Shifts, and DEI Scrutiny

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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HR leaders are managing a series of meaningful shifts across hiring, compliance, immigration, and workplace governance. Labor market data is sending mixed signals. Federal agencies are issuing updated guidance. Immigration policies are evolving. DEI programs continue to face regulatory scrutiny and litigation risk.

Together, these developments are reshaping the environment in which HR teams operate today. They don’t exist in isolation. Each has implications for workforce planning, risk management, and long-term strategy.

Here’s what has changed recently.

Effective Date: January 2026 labor data released on February 11, 2026

What’s Changing: The U.S. Bureau of Labor Statistics reported that non-farm payroll employment rose by 130,000 in January, with the unemployment rate holding at 4.3 percent. Health care, social assistance, and construction added jobs, while federal government and financial activities cut positions. Job openings fell in December, signaling a cooling market rather than a collapsing one.

Healthcare and government sectors continue to hire, but other industries are pulling back or moving more cautiously. Wages have flattened across several sectors, and fewer workers are quitting compared to prior years. Companies are taking longer to approve new roles and applying more scrutiny to backfill decisions. Hiring hasn’t stopped, but there’s increased focus on costs, productivity, and whether positions are genuinely necessary.

HR Takeaway

National data doesn’t tell your story. Look at your own turnover, pay competitiveness, and how long it’s taking to fill roles. Retention may get easier in some areas. Specialized talent is still hard to find. Tie hiring decisions to actual business needs and budget reality.

Effective Date: January 5, 2026

What’s Changing:

On January 5, 2026, the U.S. Department of Labor’s Wage and Hour Division announced that it had resumed issuing opinion letters under the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). Opinion letters respond to specific employer-submitted fact patterns and explain how the agency applies existing statutory and regulatory requirements.

The initial set of letters addresses discrete compliance questions under the FLSA and FMLA, reinforcing the agency’s interpretations of overtime obligations, exemption analysis, and leave eligibility requirements. Although opinion letters apply to the requesting party’s facts, they reflect the Wage and Hour Division’s current interpretive position.

HR Takeaway

Use opinion letters as a compliance check. Review recent guidance with counsel if your organization offers incentive pay, uses hybrid or remote schedules, or manages complex leave tracking. Confirm that exemption analyses are current, overtime calculations include all required compensation elements, and FMLA eligibility determinations rely on accurate, documented hours-of-service records.

Effective Date: February 27, 2026, with impact on the FY 2027 H-1B cap registration season (occurring in March 2026)

What’s Changing:

On December 23, 2025, U.S. Citizenship and Immigration Services announced that the Department of Homeland Security is amending the H-1B selection process to move away from a strictly random lottery and toward a system that gives greater weight to higher-skilled workers, as measured by wage level.

Beginning February 27, 2026, H-1B registrations will be categorized by earnings levels under the Occupational Employment and Wage Statistics program. Registrations at wage level IV will be entered into the lottery 4 times, while registrations at wage level I will be entered once, with levels II and III receiving proportional weighting. The rule will apply to employers preparing for the FY 2027 cap lottery registration period, which opens in March 2026.

The change increases the strategic importance of wage level determinations submitted at the time of registration. Employers must align job duties, prevailing wage classifications, and compensation decisions with supporting documentation, as the wage level now directly affects selection probability.

HR Takeaway

Compensation strategy now intersects directly with immigration strategy. Employers that rely on H-1B talent should review salary bands, prevailing wage determinations, and workforce projections before the March registration window. Model selection scenarios based on wage level and develop contingency hiring plans. Early coordination among HR, finance, and immigration counsel will be essential this filing season.

Effective Date: January 1, 2026

What’s Changing:

Congress originally set the limit for dependent care flexible spending accounts at $5,000 in 1986 and did not index it for inflation. Aside from a one-year increase in 2021 tied to pandemic relief legislation, the cap stayed at that level for nearly 40 years. The One Big Beautiful Bill Act raises the annual limit to $7,500, effective January 1, 2026, or $3,750 for married individuals filing separately.

For employees, the change provides additional pre-tax capacity to cover rising childcare expenses. For employers, it changes plan mechanics. If highly compensated employees increase their elections while lower-paid employees do not, nondiscrimination testing under Internal Revenue Code Section 129 could become more challenging. A plan that comfortably passed testing at $5,000 may produce different results at $7,500 without broader participation.

The update also requires practical changes. Employers will need to revise plan documents, update summary plan descriptions, adjust payroll systems, and reflect the new limit in open enrollment materials.

HR Takeaway

Do not treat the $7,500 limit as a simple enhancement. Run nondiscrimination testing projections before the 2026 plan year, especially if participation skews toward higher earners. Consider communication strategies that support broader enrollment across pay levels. Early coordination with benefits counsel and payroll vendors will help prevent testing failures and avoid corrective action later.

Effective Date: February 5, 2026 ruling

What’s Changing:

A federal court dismissed Missouri’s lawsuit against Starbucks over its diversity programs. The state alleged that Starbucks discriminated against white, male, and heterosexual applicants through its diversity, equity, and inclusion (DEI) policies, which tied executive compensation to diversity metrics starting in 2020.

The court found the complaint too vague. Missouri didn’t identify who was actually harmed or provide evidence that Starbucks’ policies led to specific rejections or terminations. The judge called the claims speculative and said the state left enforcement and implementation details “to the imagination.” Missouri plans to appeal.

The dismissal doesn’t end DEI litigation risk. It shows courts still require factual pleading, but scrutiny of these programs continues in both lawsuits and policy debates.

HR Takeaway

Review DEI programs for compliance with federal and state anti-discrimination laws. Focus on inclusive practices and equal opportunity. Avoid quotas or criteria that exclude candidates based on protected characteristics. Document the business rationale and track how programs actually operate, not just how they’re described.

Effective Date: February 4, 2026, filing

What’s Changing:

The U.S. Equal Employment Opportunity Commission (EEOC) filed a motion to enforce a subpoena in federal court on February 4, 2026, to obtain records from Nike regarding its DEI programs. The agency claims white workers may have faced discrimination and wants documents on layoff criteria, how race and ethnicity data were used, and details about 16 programs tied to mentoring, leadership, and career development.

Nike called the move an “unusual escalation” and said it has cooperated extensively, sharing thousands of pages and working in good faith with the agency. The EEOC says Nike hasn’t fully complied with prior requests. EEOC Chair Andrea Lucas, who filed a complaint against Nike in May 2024 before becoming chair, said the agency will take all necessary steps to investigate when there are indications an employer’s DEI programs may violate federal anti-discrimination law.

The subpoena marks a more formal investigation stage. Employers under similar scrutiny should expect detailed reviews of program design, eligibility standards, data collection, and decision-making processes.

HR Takeaway

Regulatory focus on diversity programs isn’t going away. Review your policies, leadership pipelines, mentorship offerings, and promotion trends now. Document decisions clearly, apply standards consistently, and loop in legal counsel early.

Recent developments require follow-through.

If federal guidance has changed on wages, hours, or leave, check whether your policies still line up. Immigration rule changes might affect how you structure pay or plan headcount. Benefits legislation that hasn’t passed is still worth running numbers on now. DEI programs are under scrutiny, so make sure your criteria are defensible, and your records are in order. Hiring should be based on what’s happening in your business, not what the headlines say about the labor market.

These aren’t abstract policy questions. They’re part of what HR handles regularly. Good data, clear reasoning, and involving legal early help you stay ahead of problems instead of reacting to them.

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The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.