HR Update – TMA & Sesco – Jan 19, 2026

WHAT EMPLOYERS SHOULD KNOW ABOUT PRESIDENT TRUMP’S AI EXECUTIVE ORDER

• President Trump has signed an Executive Order titled Ensuring a National Policy Framework for Artificial Intelligence (EO). This EO targets state laws addressing artificial intelligence (AI) and creates potential compliance issues employers must carefully navigate.

• Key Aspects of the EO. The EO’s stated purpose is to encourage AI innovation, reduce barriers to AI development, lessen inconsistencies in state regulation, and target laws deemed to “embed ideological bias within models.” The EO will create an AI Litigation Task Force to challenge state laws considered inconsistent with the EO’s purpose. It is presently unclear which states or specific laws the Task Force may challenge. Accordingly, there is some uncertainty regarding what existing legislation may be implicated—and therefore targeted—by the EO’s Task Force.

• Current AI State Laws. At this point, many—if not most—employers use AI in some aspects of the hiring, recruitment, and onboarding process. In response to concerns that employer AI usage could result in discriminatory employment decisions, a number of states enacted laws aimed at reducing the potential risk of biased AI-involved employment decisions. The EO’s interplay with this new patchwork of state AI-in-employment laws creates some uncertainty about whether and how to comply with the state framework, the EO, or both. 

• To be clear, the EO does not presently invalidate any state or local AI laws. Thus, unless a court blocks a law via an injunction or Congress enacts a federal law preempting the state or local counterpart, such laws remain enforceable. For now, then, employers should continue to comply with all state and local laws regulating AI usage in employment. But given the increase in AI usage in employment decisions and corresponding increase of regulations (both state and federal), employers must stay abreast of the ever-changing legal landscape.

DOL OPINION LETTER CONFIRMS BONUSES UNDER PREDETERMINED PAY PLANS MUST BE INCLUDED IN REGULAR RATE

• The U.S. Department of Labor’s (DOL) Wage and Hour Division has issued Opinion Letter FLSA2026-2, addressing whether certain “Safety, Job Duties, and Performance” bonuses may be excluded from an employee’s regular rate of pay when calculating an employee’s overtime premium under Section 7(e) of the Fair Labor Standards Act (FLSA). The short answer: they cannot, at least under the circumstances analyzed in the opinion letter.

• The opinion letter involves a pay plan for waste-management drivers that included a base hourly rate plus incentive bonuses tied to safety, job performance, and completion of duties. These bonuses were formula-driven and could add up to $9.50 per hour when specific criteria were met. Once those criteria were satisfied, the amount of the bonus was quantifiable under the plan and automatically earned by the employee.

• The DOL confirms in this opinion letter that Section 7(e)(3) of the FLSA allows exclusion only of truly discretionary bonuses—those determined at the employer’s sole discretion, at or near the end of the measurement period, and not promised in advance. Here, the employer previously set the terms and formula for earning the bonus, creating a predetermined plan that employees could reasonably expect. According to the DOL, this structure means the employer “abandoned” its discretion over both the fact and the amount of payment.

• As the FLSA’s regulations explain, “If the employer promises in advance to pay a bonus, he has abandoned his discretion with regard to it.” 29 C.F.R. § 778.211(b). Even if there is some judgment involved in applying the criteria—such as deciding whether a vehicle was returned in “clean” condition—that does not render the bonus discretionary. Eligibility and amount are based on terms set before the work was performed, not the employer’s sole discretion.

FMLA LEAVE CALCULATION WHEN EMPLOYERS CLOSE FOR WEATHER

• The DOL has stated in an opinion letter that if an employee is scheduled to use less than a full workweek of Family and Medical Leave Act (FMLA) leave, the time when the employer is closed for inclement weather will not be deducted from the employee’s FMLA entitlement unless the employee was expected to work during the closure.

• Conversely, however, the opinion letter states if an employee is scheduled to take a full workweek of FMLA during a week when the school is closed for part of the week, the entire week is counted against an employee’s FMLA entitlement.

• Holidays, the DOL explained, do not count against FMLA leave entitlement if the employee is scheduled for FMLA leave of less than a full workweek and is not otherwise expected to work on the holiday. On the other hand, however, the DOL stated the holiday will count against an employee’s FMLA leave entitlement if it falls during a week in which the employee was scheduled to take a full workweek of leave.

NLRB BACK IN BUSINESS

After nearly a year without a quorum, the National Labor Relations Board (NLRB or Board) is moving again. With new members sworn in and a Republican majority restored, the real question is no longer whether Biden-era labor policy will be revisited; it is the speed with which the Board chooses to act.

Decisions Most Likely to Be Revisited:

• Stericycle, Inc. Stericycle reshaped handbook enforcement by making most workplace rules presumptively unlawful. Employers were required to prove that even neutral policies could not reasonably chill protected activity. A return to a more balanced “reasonably prudent employer” framework is widely expected.
• Cemex Construction Materials. Cemex created a new pathway for union recognition without an election if an employer committed any unfair labor practice after declining card-check recognition. It is broadly viewed as the most consequential pro-union decision of the Biden era and one of the most likely to be overturned.
• Lion Elastomers. Lion Elastomers altered long-standing misconduct standards, limiting employers’ discretion to discipline employees engaged in protected activity, even when behavior crossed lines that had previously been considered legitimate grounds for discipline. A shift back toward clearer misconduct rules is anticipated.
• Captive Audience Meetings. Restrictions on mandatory employer meetings about unionization are also expected to be rolled back, restoring long-recognized employer speech protections under Section 8(c) of the Act.

Broader Policy Shifts Taking Shape

Beyond individual cases, reporting and analyst commentary point to movement in several broader areas:

• Joint Employer Status. The Biden Board’s expansive 2023 standard is likely to be superseded by the narrower Trump-era 2020 rule, raising the bar for joint-employer findings.
• Decertification Elections. Rules that made it more difficult for employees to remove unions, including aggressive blocking-charge doctrines, are expected to be repealed or softened.
• Section 7 Interpretations. Broad readings of protected concerted activity are likely to be narrowed, reducing exposure tied to employee speech and conduct claims.

What This Means for Employers

• Momentum should not be mistaken for immediacy.
• Cemex, Stericycle, and Lion Elastomers remain the controlling law today. Employers should continue to comply fully.
• Expect movement toward fewer restrictions on employer speech, more predictable handbook standards, and a renewed emphasis on elections rather than card-based recognition. For employers and unions alike, the safest assumption is not stability, but change.
• Between adjudication and rulemaking, the Board now has multiple avenues to unwind or recalibrate the last four years of labor policy. Some shifts will move faster than others.