Employers Expect AI Policy Changes to Significantly Impact Business: Littler Survey

Artificial intelligence (AI) use in the workplace is the top area where employers expect policy and regulatory changes to impact businesses over the next year, according to The Littler Annual Employer Survey Report published in May 2026. The percentage of respondents who selected AI doubled from 42% in 2025 to 84% in 2026.

Data privacy is the second area where employers expect policy changes to impact their business at 53%. Immigration and diversity, equity and inclusion (DEI) considerations both fell year over year, from 75% to 49% and 84% to 38%, respectively.

“The shifts in this year’s survey relating to immigration and DEI do not mean that these issues have dissipated,” says James A. Paretti Jr., co-chair, and Shannon Meade, executive director, of Littler’s Workplace Policy Institute. “Rather, businesses appear to be adjusting to a ‘new normal’ in the second year of the Trump administration and turning their attention to what’s coming next – particularly AI – as the workplace policy and regulatory landscape continues to evolve.”

Regarding overall workforce management, financial conditions are the top concern for organizational leadership, with 52% reporting it is of elevated concern, followed by technology transformation, regulatory uncertainty and employment/workforce risk.

AI

When asked which areas their organizations are currently using AI, human resources (54%) and information technology or cybersecurity (54%) top the list, followed by marketing, sales and communications (52%), legal and compliance (48%) and operations (47%). Only 6% of respondents report that their workplace is not currently using AI.

Regarding AI governance, 68% of respondents report they have a formal policy to govern AI use in the workplace, a significant jump from 2025, when just 38% of respondents reported having a specific policy to address employee AI use. More than half of respondents also have a formal review process for AI tools (55%) and restrictions on what can be entered into AI tools (54%). Only 13% of respondents say they have not implemented any AI governance measures.

Despite increased governance measures, employers are still concerned about AI-related litigation. The top four AI-related litigation concerns over the next year include:

• “Data privacy” (49%)
• “Discrimination or bias” (45%)
• “State or local AI-specific statutes or regulations” (43%)
• “Recordkeeping, documentation or explainability requirements” (35%)

21% of respondents report that their organization is not concerned about AI-related litigation.

“AI adoption is moving quickly, but governance is still playing catch-up. That mismatch could leave employers vulnerable to significant risk, especially given the complexity around compliance,” says Niloy Ray, co-chair of Littler’s AI and Technology Practice Group. “Between an increasingly active patchwork of state laws and unresolved liability questions in light of new federal policy proposals, employers will likely remain on the hook for how these tools are used.”

37% of respondents say that their workplace has reassessed or is in the process of reassessing job responsibilities due to an actual or anticipated increase in AI use. In addition, 14% say they have already reduced hiring, and 11% have already reduced their workforce.

“AI is opening new frontiers, redefining job responsibilities, changing the way we hire and modifying staffing patterns. These changes will only multiply in frequency and impact as time passes, making our ability to work with AI a critical part of working more effectively,” says Marko Mrkonich, co-chair of Littler’s AI and Technology Practice Group.

Immigration

When asked about the expected impact of enforcement by regulatory agencies and compliance requirements over the next year, 73% say they expect either significant or moderate impact from the Department of Homeland Security (DHS) and U.S. Immigration and Customs Enforcement (ICE).

In response to potential workforce impacts due to immigration policy over the last 12 months, the top five actions taken by respondents’ organizations include:

• “Prepared for government audits, inspections or site visits” (54%)
• “Trained managers and HR teams on immigration compliance” (42%)
• “Engaged immigration counsel or expanded legal support” (41%)
• “Strengthened employment eligibility verification practices” (40%)
• “Adjusted visa sponsorship strategies” (38%)

“The rapid pace of change in immigration policy over the past year has created significant challenges for businesses in managing day-to-day operations and staffing,” says Jorge R. Lopez, chair of Littler’s Immigration and Global Mobility Practice Group. “In response, many employers are taking a range of actions to clarify plans and processes and to prepare for worksite enforcement activity.”

Employment

Employers are expressing concern about employment-related litigation over the next year, with year-over-year increases in 10 of the 13 categories surveyed. The top three areas of concern are discrimination/harassment (68%), workplace accommodations (67%) and wage and hour/pay practices (57%). Concerns surrounding AI in terms of employment-related litigation doubled from 16% in 2025 to 32% in 2026.

For positions that could be performed remotely, 44% of respondents’ organizations have a hybrid schedule, with nearly half (48%) of those workplaces requiring employees to be in the office three days per week. 33% of respondents say, “On-site work requirements vary person-to-person or job-to-job.”