Workplace Discrimination Law Updates: Key Insights for Employers

As businesses plan for 2026, staying ahead of state-level workplace discrimination laws is crucial. Changes in several states will affect policies, employee contracts, and compliance obligations. Understanding these updates now can help you avoid penalties, maintain employee trust, and foster a fair workplace.

Key State Updates for 2026

California

• SB 464: Employers with 100+ employees must store demographic pay-data separately from personnel files.
• SB 642: Expanded pay-transparency and equal-pay rules, including longer timelines for wage discrimination claims.
• AB 406: Expands leave protections for crime victims and their family members.
• SB 294: Requires a standalone “worker rights” notice to be provided at hire and annually.

Employer Action: Update pay-equity tracking and reporting processes, review leave policies, and ensure all employees receive required rights notices.

Illinois

• Limits on confidentiality clauses in employment and settlement agreements, including no foreign law or venue restrictions.
• Expanded protections for collective or concerted employee activity.

Employer Action: Review and update contracts and settlement agreements to remove prohibited confidentiality restrictions and ensure compliance with concerted activity protections.

Colorado

• Kelly Loving Act (HB 25-1312): Expands anti-discrimination protections for transgender individuals under the Colorado Anti-Discrimination Act.

Employer Action: Ensure non-discrimination policies and employee training reflect these expanded protections.

Utah

• SB 86 – Workplace Protection Amendments: Expands harassment and discrimination definitions to include sexual orientation and gender identity.

Employer Action: Update harassment and discrimination policies and provide training for management and HR staff on the expanded protected classes.

Federal Discrimination Law Developments to Watch in 2026

In addition to state-level updates, several important federal changes are underway that employers should monitor closely. While no new federal discrimination laws have been passed yet, shifts in enforcement priorities and policy guidance are already taking shape for 2026.

Key federal developments include:

• EEOC Enforcement Focus: The Equal Employment Opportunity Commission (EEOC) continues implementing its 2022–2026 Strategic Plan, emphasizing systemic discrimination investigations and stronger compliance monitoring. Employers can expect more frequent audits and closer reviews of hiring, pay, and promotion practices.

• New Executive Order: Issued in early 2025, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” revokes prior affirmative action and DEI-related mandates for federal contractors. This change shifts focus toward merit-based employment decisions.

• OFCCP Guidance Updates: The Office of Federal Contract Compliance Programs (OFCCP) is expected to issue new regulations aligning with this Executive Order, clarifying contractor responsibilities and reshaping reporting requirements.

Together, these developments signal a renewed federal emphasis on merit-based employment practices and stronger EEOC enforcement heading into 2026. Employers—especially federal contractors—should review policies, diversity programs, and compliance processes to ensure they align with evolving federal standards.

What These Changes Mean for Employers in 2026

• Policy Updates: Update handbooks and workplace policies to reflect new definitions of protected classes and prohibited behaviors.
• Contract Compliance: Ensure employment agreements, settlement agreements, and confidentiality clauses align with new standards.
• Training and Awareness: Train HR teams and managers on new protections, including transgender and LGBTQ+ rights, pay transparency, and leave rights.
• Recordkeeping: California employers must track and store demographic pay data separately and ensure reporting compliance.

• Monitor Federal Policy Shifts: Stay alert to evolving federal guidance from the EEOC and the Office of Federal Contract Compliance Programs (OFCCP). Upcoming changes to contractor rules and increased enforcement under the new executive order may affect hiring practices, DEI programs, and reporting obligations. Regularly reviewing federal updates will help ensure compliance across all levels.

Key Takeaways for Businesses

• Update policies, contracts, and employee notices ahead of 2026.
• Provide training on updated discrimination and harassment protections.
• Monitor compliance to avoid penalties and support a fair, inclusive workplace.

Staying proactive with these changes ensures legal compliance and reinforces a workplace culture where all employees feel valued and protected.

Frequently Asked Questions: 2026 State Discrimination Law Updates

Q1: Which states have major discrimination law changes coming in 2026?

California, Illinois, Colorado, and Utah are implementing significant updates to pay transparency, employee protections, and harassment definitions that employers need to address.

Q2: What do California employers need to do for 2026 compliance?

Employers with 100+ employees must store demographic pay data separately, update pay-transparency policies, expand leave protections for crime victims, and provide standalone “worker rights” notices at hire and annually.

Q3: How does Illinois change employee confidentiality agreements in 2026?

Illinois will limit confidentiality clauses in employment and settlement agreements, prohibiting foreign law choice, venue restrictions outside the state, and other overly restrictive terms. Contracts must be updated to comply.

Q4: What protections are expanding in Colorado and Utah?

Colorado expands protections for transgender employees under the Kelly Loving Act, while Utah broadens harassment and discrimination definitions to explicitly include sexual orientation and gender identity.

Q5: What steps should employers take to prepare for these changes?

Update policies, handbooks, and employment contracts; provide HR and management training on new protections; ensure proper recordkeeping (especially for pay data in California); and review leave and settlement agreement procedures.