AK Webinar Recap | 2026 Outlook

In the first live roundtable discussion of 2026, Adams Keegan experts Charles Rodriguez, Brandon Roland , Amanda McCollum, and Justin Brown explored the key trends and policy developments shaping the year ahead, from hiring and labor market dynamics to evolving state leave mandates and the responsible use of AI in the workplace. They also reviewed what employers need to know about 2026 Form W-2 reporting and updates related to No Tax on Tips and No Tax on Overtime. 

Couldn’t attend the webinar? Access the recording here.

Immigration and employment eligibility enforcement
A major compliance update is the end of the 540-day automatic extension for Employment Authorization Documents (EADs), effective October 30, 2025. Employees renewing their EADs will largely lose this automatic extension while their application is pending, increasing the risk of employment authorization gaps. USCIS now advises employees relying on EADs to submit renewal applications up to 180 days before expiration. For employers, this necessitates proactive document tracking, timely reverification, and routine I-9 audits. Furthermore, late-2025 court decisions temporarily halted the termination of Temporary Protected Status (TPS) for certain countries. Because TPS designations are subject to change, employers must stay current on guidance and communicate with affected workers.

OBBBA’s No Tax on Tips and Overtime
The OBBBA’s “no tax on tips” and “no tax on overtime” provisions continue to generate questions heading into 2026. These rules do not change payroll withholding, and any benefit is claimed by employees on their individual tax returns, not through the payroll process. The IRS has clarified that only voluntary, customer-determined tips qualify, while service charges do not. For overtime, only the premium portion required under the Fair Labor Standards Act, the number of hours worked over 40 in a work week, is eligible. Clear employee communication is essential as many workers may not realize a benefit due to low federal tax liability.

Work Opportunity Tax Credit (WOTC)
As of January 2026, the Work Opportunity Tax Credit has expired and has not yet been extended by Congress. However, retroactive reinstatement remains possible and employers should not abandon screening practices. Continuing to collect eligibility information preserves the opportunity to claim credits later if the program is renewed, while avoiding rushed or non-compliant processes should legislation move forward.

Marijuana policy and workplace testing
Federal regulators have proposed rescheduling marijuana from Schedule I to Schedule III; however, this change would not legalize recreational use at the federal level, and state and local marijuana laws would continue to operate independently. This creates challenges for employers, particularly around drug testing and impairment. Even in states that protect off-duty use or medical cardholders, impairment at work remains unacceptable. Employers should ensure policies clearly address impairment, testing protocols, and reasonable suspicion procedures. Rescheduling in 2026 is forecast to increase usage, expand research, and renew focus on marijuana-related criminal records in hiring.

AI in the workplace
In 2026, the key question for employers is no longer whether AI will be used, but how it will be governed. Many organizations still lack formal AI policies, even as employees rely on AI tools for writing, research, scheduling, and meeting transcription. Risks include data security, misuse of company information, employee privacy, and potential exposure under discrimination and harassment laws. Employers should anticipate these issues now and establish guardrails before problems arise.

Labor trends shaping 2026
The labor market entering 2026 reflects a gradual cooling. Job openings declined through late 2025, unemployment edged higher, and employee job-security concerns rose. Looking ahead, job openings should stabilize but remain below recent highs, while unemployment may continue to tick upward. At the same time, proposed changes to federal WARN Act thresholds and continued state-level activity signal that employers should remain alert to evolving notice and compliance obligations.

The team’s discussion also covered minimum wage updates, IRS relief for Paid Family Medical Leave tax obligations, and federal and state labor and employment activity. They also addressed client questions on pay transparency and equity, Trump Accounts, cryptocurrency compensation, and redefining employee work locations.

View the full webinar here and dedicate about 50 minutes to become fully involved in the discussion.