Worker Classification, Noncompete Agreements, and AI: 2026 Changes in US States’ Labor Laws

Significant changes in US labor and employment law have taken place at the federal level, as covered in our earlier blog, Overtime Exemptions, Joint Employer Standards, and EEO-1 Reporting: US Labor Law Changes for Mid-2026. Similarly, several US states have introduced new or amended legislation that employers in those states need to factor into their compliance practice. This blog covers some of the key developments.

At a glance: A state-by-state look at the labor issues in focus

The focus of the latest labor law changes varies from state to state. The table below identifies the key labor and employment issues addressed in each state.

1. Colorado

On May 14, 2026, Colorado Governor Jared Polis signed a revised AI law that requires the state’s employers to notify job applicants and others whenever they use AI and similar automated technologies to make “consequential” employment decisions. The bill — Senate Bill 26-189 — repeals a previous law that was challenged in court.

The bill protects residents who “have access to or eligibility for an opportunity in Colorado, or who are evaluated in a consequential decision by someone doing business in Colorado,” according to HR Dive.

Under the law, if an employer uses AI or a similar automated tool and reaches a decision that constitutes an adverse outcome for an applicant, the employer must provide a description of the tool’s role in the decision within 30 days. The law goes into effect on January 1, 2027.

Source: HR Dive

2. Connecticut

On May 11, 2026, Connecticut Governor Ned Lamont signed Public Act 26-12 into law, strengthening protections for the rights of the state’s workers. The bill addresses job protections for services workers; wage theft in the building trades; and compensation for workers who are assaulted on the job. It also mandates the disclosure of position wage ranges and general benefit descriptions in job postings.

The act includes 75 sections of new laws, which also create a fair teacher termination process with a binding decision and the same protections offered to other public service workers, as well as a requirement for reasonable breaks for lactating mothers to breastfeed or pump.

As of mid-May, Governor Lamont was also expected to sign Senate Bill 5, an online safety law that addresses Automated Employment-related Decision Technology (AEDT). The bill creates a program for third-party risk assessments to vet and certify AI models, but it does not include provisions for making evidence admissible to defend against model-specific claims.

Sources: Governor of the State of Connecticut, Littler

3. Illinois

On June 1, 2026, the Family Neonatal Intensive Care Leave Act went into effect in Illinois, requiring organizations with 16 or more employees to provide unpaid leave to workers who have a child in a neonatal intensive care unit. People who work for companies with 16 to 50 employees can take up to 10 days of leave, and workers at businesses with 51 or more individuals on staff can take up to 20 days of leave.

Source: Newsweek

4. Maine

The state of Maine recently enacted LD 54, “An Act to Require Employers to Disclose Pay Ranges and Maintain Records of Employees’ Pay Histories,” which goes into effect on July 29, 2026.

Under the law, employers with at least 10 employees are required to include a prospective “range of pay” in job postings, where a range of pay is defined as the range that an employer expects to use in setting wages for a position. That range can include any applicable pay scale, a previously set range of wages for that position, the actual range for those currently in equivalent positions, or the budgeted amount for the position.

The law also requires employers to disclose the range of pay offered for an employee’s current position if the employee requests it.

Additionally, the law mandates that employers maintain a record of each position held and the pay history for each worker during the worker’s employment and for three years after the worker’s departure.

Source: Littler

5. New Jersey

New Jersey now has new regulations that provide clarity around the statutory ABC test for determining whether a worker is an independent contractor or employee. The new regulations apply to the New Jersey Unemployment Compensation Law, the New Jersey Wage and Hour Law, and the New Jersey Wage Payment Law, among others.

To provide more clarity, the regulations provide clear standards and enforcement guidelines that enable organizations to correctly classify workers. They also protect independent contractors and their right to operate businesses.

To satisfy the ABC test:

• A worker must have been and continues to be free from control or direction over the performance of services — under the worker’s contract of service and in reality — to be considered an independent contractor.
• The work performed is either outside the usual course of the business the contractor is working for or outside of all the enterprise’s places of business.
• The worker is customarily engaged in an independently established trade, occupation, profession, or business.

There is now a 120-day stay on the rules, which will be operative as of October 1, 2026.

Source: ROI NJ

6. Tennessee

Tennessee Governor Bill Lee signed House Bill 1034 into law on May 7, 2026, establishing the state’s first statutory framework for regulating noncompete and restrictive covenant agreements. Under the law, employers are prohibited from requesting, requiring, or enforcing noncompete agreements against employees who earn less than $70,000 USD annually, or the hourly equivalent. The restriction applies from July 1, 2026, onward.

Where an employee’s income exceeds the $70,000 USD threshold, the law views two years as a reasonable amount of time to prohibit a former employee from working for a competitor if there’s no sale of a business involved, and it advises courts to take this same view.

Source: Bloomberg Law

7. Virginia

Virginia has enacted a wide-reaching set of measures designed to protect employees’ wages and improve conditions for workers in the state. Announced by Governor Abigail Spanberger in April 2026, the laws establish a statewide paid family and medical leave program and set policies that address wage theft, pay equity, and compensation standards for public construction workers. The package also includes a minimum wage increase that raises the hourly wage to $13.75 USD on January 1, 2027, and then to $15.00 USD on January 1, 2028.

The state’s paid leave program allows eligible workers to take up to 12 weeks of paid leave to recover from a serious illness, welcome a new child, or care for a loved one. The benefit becomes available to workers on December 1, 2028.

Changes to the state’s wage system for public construction projects require state agencies to set Virginia-specific wage rates that are aligned with local standards. As of July 1, 2027, the prevailing wage system for public works projects expands to include construction projects valued at $5 million USD or above at higher education institutions.

The new laws also prohibit Virginia’s employers from requesting or using a job applicant’s salary history when determining pay. And they create better pathways for workers to recover unpaid earnings.

Additional measures are included in this comprehensive package.

Sources: Rocktown Now, Woods Rogers, Virginia Employment Commission

8. Washington

Like Virginia, the state of Washington has also rolled out a package of legislation that addresses pregnancy accommodations, noncompete agreements, behavioral health in the construction sector, and wage and hour claims, among other issues.

According to law firm Ogletree Deakins, the bills signed by Governor Bob Ferguson include:

• HB 2264 – a law that allows a state resident to receive unemployment benefits after voluntarily participating in an employer’s reduction in force
• SB 5874 – legislation that changes the penalties for errors in unemployment compensation reports, as well as the requirements for reporting employee information such as Social Security numbers and standard occupational classifications
• HB 1155 – the law banning noncompetition agreements with employees and independent contractors
• HB 2303 – a law that prohibits employers from requiring, coercing, or requesting that employees implant a microchip. It also prohibits employers from using subdermal technology for management or surveillance.
• HB 2105 – legislation stating that employers have five business days to notify employees if a federal agency asks to inspect an employee’s I-9 authorization form and work records
• SB 6058 – a law that gives the Washington Department of Labor and Industries more discretion in how it investigates wage complaints and permits civil penalties for willful violations

These are just some of the labor and employment laws Governor Ferguson recently signed. They will take effect on June 11, 2026, with the exception of the law on noncompete agreements, which takes effect on June 30, 2026.

Source: Ogletree Deakins

Safeguard Global keeps close watch on global developments in labor and employment law and their potential impact on employers. For news on labor law developments outside the US and earlier news from within the US, please visit our Regulatory Hub or contact us for more information.