Littler's 2026 Labor Survey: Employers Brace for AI Disruption and Compliance Battles

Littler Mendelson's 2026 Labor Survey Report, drawing on responses from more than 300 C-suite executives, in-house counsel, and human resources professionals across the United States, finds that 92 percent of employers expect artificial intelligence to reshape their workforce within the next five years — yet fewer than half have formal policies governing how the technology is deployed.

The annual survey, released by the employment and labor law firm on Tuesday, captures a corporate leadership class caught between accelerating technological change and a thickening web of federal, state, and local regulations.

AI adoption outpaces governance

Nine in ten respondents said their organizations already use AI in at least one business function, with human resources, customer service, and data analytics leading adoption. But the survey reveals a stark governance gap: only 43 percent of companies using AI have adopted comprehensive policies addressing its use, and just 38 percent have trained managers on the legal risks associated with AI-driven decision-making.

That gap carries legal exposure. Nearly two-thirds of respondents said they anticipate an increase in lawsuits or regulatory actions tied to AI use in employment decisions over the next two years — including claims related to automated hiring tools, algorithmic performance management, and workplace surveillance.

Workforce reductions and restructuring

The survey also documents continued restructuring pressure. Fifty-eight percent of employers said they had conducted layoffs or reductions in force during the past twelve months, and 41 percent said they plan further workforce changes in 2026. Technology and automation ranked among the leading drivers of those decisions, cited by 37 percent of respondents, alongside cost-cutting mandates and shifting business models.

At the same time, employers reported difficulty filling certain roles even amid headcount pressure. Skilled trades, healthcare, and technology positions remain the hardest to staff, with 64 percent of respondents saying the talent shortage has worsened over the past year.

Union activity and worker advocacy on the rise

Labor organizing continues to command boardroom attention. Sixty-one percent of surveyed employers said they expect union organizing activity to increase in 2026, up from 54 percent in the prior year's survey. Industries with historically low union density — including technology, finance, and professional services — reported the sharpest rise in organizing attempts.

Employers also flagged a surge in protected concerted activity outside formal union channels, including walkouts, public petitions, and social media campaigns. Forty-four percent said they had faced some form of collective worker action in the past year.

Regulatory uncertainty dominates the agenda

Looking ahead, regulatory uncertainty ranks as the single greatest concern among respondents. Seventy-one percent said the changing patchwork of employment regulation — spanning pay transparency laws, non-compete restrictions, and AI-specific statutes — makes workforce planning more difficult than it was two years ago.

The survey's authors note that employers are responding by expanding compliance teams, increasing reliance on outside counsel, and investing in manager training. Whether those investments keep pace with the speed of technological and regulatory change will be a defining question for 2026.