The April 2026 employment law update highlights a sharp turn in federal enforcement priorities, as agencies tighten scrutiny on joint employment liability, DEI practices, and federal contractor compliance – reshaping the legal risk landscape for employers across industries. Get the latest below.
DOL Unveils Revised Joint Employer Rule to Clarify Shared Liability for Wage and Hour Violations
The U.S. Department of Labor announced this month a newly proposed rule on joint employer liability that more detailed guidance on how businesses would be evaluated when determining responsibility for wage and hour violations under federal labor laws. The rule applies to the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), and is intended to clarify when multiple employers may be held jointly liable for unpaid wages, overtime violations, or leave-related obligations.
The proposal distinguishes between two forms of joint employment: horizontal and vertical. Horizontal joint employment occurs when a worker has separate employment relationships with two or more related employers that are sufficiently associated with one another. For example, if two restaurants share ownership, management, or scheduling authority, an employee working for both may be considered jointly employed. In such cases, the Department would examine whether the employers coordinate operations, share supervisors, or have overlapping control over employment decisions.
Vertical joint employment applies when a worker is formally employed by one company, such as a staffing agency or subcontractor, but another business exercises significant control over the employee’s work. To determine this, the rule outlines four main factors: the ability to hire or fire the worker, supervision and control over work schedules or conditions, authority over pay and compensation methods, and maintenance of employment records.
Unlike the 2020 Trump-era rule, the new proposal allows courts and investigators to consider indirect or even potential control, not just direct actions taken by the employer. It also removes strict limits on considering economic dependence, meaning broader workplace realities may influence decisions. This approach aims to improve legal defensibility while still giving employers clearer compliance standards.
Latest EEOC Report Signals Shift Toward DEI Scrutiny, Pre-Litigation Settlements, and AI Adoption
The U.S. Equal Employment Opportunity Commission’s 2025 performance report issued this month reveals a major shift in enforcement priorities under President Donald Trump’s administration, signaling a stronger focus on workplace diversity, equity, and inclusion (DEI)
programs, religious discrimination, and what the agency calls discrimination against American workers.
The report highlights the agency’s efforts to challenge DEI initiatives it considers unlawful, mentioning DEI 14 times and emphasizing “anti-American bias” in hiring practices. One example was a $1.4 million consent decree involving LeoPalace in Guam, where the EEOC alleged foreign-preference discrimination.
The agency also reported recovering $660 million for nearly 17,700 workers facing workplace discrimination, with $528 million secured before litigation through mediation, conciliation, and settlements—the highest pre-litigation recovery in its history. This signals stronger pressure on employers during investigations before lawsuits are filed.
Additionally, the EEOC is expanding its use of technology, including texting platforms and artificial intelligence tools like Microsoft 365 Copilot, to improve communication, legal research, and case preparation.
The report reflects a broader philosophical realignment at the EEOC, with less emphasis on traditional civil rights protections for LGBTQ+ employees and a greater focus on scrutinizing workplace policies involving immigration and hiring preferences.
DOJ Secures $17M IBM Settlement in First False Claims Act Case Targeting DEI Policies
IBM has agreed to pay $17 million to settle allegations brought by the U.S. Department of Justice that it violated the False Claims Act through diversity, equity and inclusion (DEI) initiatives tied to its federal contracting work. The Justice Department, under the Trump administration, said the settlement is the first under a new enforcement initiative targeting DEI-related practices in companies receiving federal funds.
Officials alleged that IBM engaged in discriminatory policies by linking bonus compensation to workforce demographic targets, adjusting interview eligibility based on race or gender, and setting diversity goals for business units. The government also claimed the company offered training, mentoring, and leadership opportunities on the basis of protected characteristics rather than merit.
IBM did not admit liability and denied wrongdoing but agreed to settle and pay the penalty while also modifying or eliminating the contested policies. A company spokesperson said IBM’s hiring and promotion strategy is based on ensuring employees have the skills required by clients.
The Justice Department framed the case as part of a broader effort to ensure federal contractors do not use taxpayer-funded work to support what it described as unlawful DEI practices. The initiative follows a 2025 directive allowing False Claims Act enforcement against contractors alleged to engage in discriminatory diversity programs.
The settlement also reflects a wider political and legal campaign by the administration to restrict DEI programs in both government and private-sector contracting, alongside increased scrutiny of firms and institutions with diversity-focused policies.
Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment. Jeff also practices in commercial litigation as well as counsels businesses on commercial contract matters.
Leave a Reply