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Five Labor and Employment Developments to Know –July 2026

By: Alex Dominguez, Alissa Griffin, Kristin Michaels, Sonya Rosenberg, and Bill Tarnow

July 2026

Employers in Illinois and across the country should stay informed on key legal developments impacting workplace practices. Here are five important labor and employment updates for July 2026.

Potential Changes to Workforce Data Reporting

The U.S. Equal Employment Opportunity Commission (“EEOC”) has voted to implement a sea shift in decades-old reporting requirements for employers regarding workplace demographics. For the last 60 years, private employers (with 100 or more employees) and federal contractors (with 50 or more employees) have been required to submit annual workforce demographic data, broken down by job category, sex, and race or ethnicity. Historically, the EEOC has taken the position that such information was gathered for purposes of enforcement of federal equal-opportunity laws and/or for Commission research, as well as providing companies with a structured opportunity for yearly self-assessments. On Tuesday, July 21st, the EEOC voted to take the first step to abandon these federal reporting mandates. During the agency’s meeting, EEOC Chair Lucas articulated the reasoning behind the agency’s sea-shift: “The Commission’s EEO reporting requirement may have the unintended consequence of promoting rather than reducing discrimination, because of the mistaken view that it is permissible for employer to take raceand sex-based actions to correct statistical imbalances.”

In connection with the EEOC’s panel’s 2-1 vote on July 21st in favor of this reporting change, the EEOC also issued its 63-page Federal Register notice of rulemaking that would end the data collection. In the proposed Notice, the EEOC expounded upon its proposed action and underlying reasoning, which emphasized issues of cost-savings for Employers and the avoidance of potential reverse-discrimination conduct: “The Commission has preliminarily determined that the EEO Reports are inconsistent with EEO law because they may encourage employers to discriminate against employees who are not considered “minorities,” may promote racial stereotyping, and may encourage employers to engage in discrimination to avoid potential EEOC enforcement actions or to address perceived inequitable outcomes.” A public comment period on the EEOC notice and proposed action remains open through August 20, 2026. Thereafter, the EEOC agency leadership will reconvene to take final action to rescind the reporting requirements.

Chicago Updates Its Fair Workweek Ordinance Rules

Effective June 1, 2026, the City of Chicago has published updated rules about the requirements of the Chicago Fair Workweek Ordinance (the “Ordinance”). The Ordinance requires large employers with 100+ employees globally (or 250+ employees globally in the case of a not-for-profit) that have at least

50 covered employees and that are primarily engaged in the building services, healthcare, hotels, manufacturing, restaurant, retail and warehouse industries to provide covered employees with a good faith estimate of their projected work schedules upon hire, 14-days’ advanced notice concerning their upcoming work schedule, and compensation for changes to that work schedule within the 14-day notice window.

The updated Rules provide additional clarity for employers regarding several of the Ordinance’s provisions/requirements, including:

1. the definition of “week” as “seven consecutive 24-hour periods” which can begin on any day or time of the week;

2. an explanation of how the Office of Labor Standards (“OLS”) will calculate an employer’s size for purposes of determining whether the large employer threshold has been satisfied;

3. the specific contents required for the good faith estimate that must be provided to employees regarding their projected work schedule during their first 90 days of employment, including (i) the estimated number of hours the employee will work each week, (ii) the days the employee should expect to work, (iii) the times/shifts the employee should expect to work; (iv) the locations the employee should expect to work, and (v) whether the employee should expect any on-call shifts;

4. the requirement that advances work schedules postings contain (i) a time stamp with the date and time of posting, (ii) the start and end date of the week, (iii) the scheduled hours, days, times and locations that covered employees are scheduled to work, (iv) the names (consisting of at least first initial and last name) of all covered employees at the location, regardless of whether the employee is scheduled to work;

5. added guidance regarding the instances in which an employer is required to provide predictability pay to an employee whose work schedule is modified within the advance notice period and how predictability pay should be paid and recorded on employee pay stubs;

6. the procedure by which covered employers may offer additional hours to other employees after determining that no covered employees are available at the facility, and how employers should document offers for such additional shifts;

7. the scenarios in which a covered employee may voluntarily consent to forgo the right to rest pay for working shifts separated by less than a 10-hour break, and the scenarios under which a covered employee may be entitled to the right to rest pay;

8. the permissible location to which required notices may be posted in the workplace; and

9. the deletion of certain rules about OLS complaint mechanisms and procedures.

For more detail concerning the new Rules, please see the updated Fair Workweek Ordinance Rules and the Chicago Office of Labor Standards’ Summary of Changes

DOJ Memo Attempts to Chip Away at Title VII Disparate Impact Theory

In June 2026, the Department of Justice’s Office of Legal Counsel issued a memorandum opinion concluding that the disparate impact theory under Title VII of the Civil Rights Act of 1964 is unconstitutional on the grounds that it imposes liability based solely on disproportionate outcomes, or

“disparate impact,” without regard to whether an employer acted with discriminatory intent. The memo argues that the disparate impact theory overemphasizes protected traits such as race at the outset of employment decisions, and that common selection tools such as background checks, aptitude tests, and educational requirements should be presumed to be job-related and legitimate and should not give rise to employer liability, regardless of any disparate impact.

While some have interpreted the memo to signal the end of the disparate impact theory of liability, such an interpretation is incorrect and certainly would be an unwise one for employers to follow. Employers should remember that the memo is an opinion from the DOJ’s Legal Counsel—not a regulation or court ruling—and it is not binding on private litigants, state administrative agencies, or the courts. Employers still can find themselves on the receiving end of actionable disparate impact claims based on controlling and applicable Title VII precedent on the disparate impact theory, which, for the time being, remains good law. In short, the memo should be seen for what it is—the opinion of the current Legal Counsel of the DOJ, whose opinion can change with a change in administration. While the memo does indicate that the federal government agencies are unlikely to bring or pursue disparate impact theory claims, employers would be ill-advised to (mis)interpret that as indicating a change in applicable law, or as a green light to stop checking various technology and tools, including GenAI tools used in making hiring, promotional, and other employment decisions, for disparate impact and working with employment counsel to take appropriate, timely corrective action when such impact is found.

Many Illinois Employers to be Required to Pay Employees for Time Spent on Jury Duty:

• On May 26, 2026, the Illinois legislature passed an amendment to the Jury Act under HB4844.

• The amendment would require employers with more than 25 employees to compensate employees at their regular rate of pay for time served on jury duty.

• While the bill has not been signed into law yet, it was sent to Governor Pritzker on June 18, 2026.

• As written, the bill leaves a handful of open questions unanswered, including, for example:

º Whether there is a limit on the number of days of jury service for which employees must be paid.

º Whether there are exceptions or limits to the requirement to pay for time spent on jury duty for part-time employees.

• Similarly, the bill is silent on whether part-time employees who work for two or more employers are barred from receiving duplicate compensation.

º Whether juror pay can be used to reduce the compensation an employee would otherwise receive from their employer for time spent serving on jury duty.

º Whether a company can present evidence of undue hardship based on either the requirement that a particular employee be absent for jury duty or the requirement to pay an employee for time spent on jury duty.

• We will continue to monitor this issue for further developments, including when/if the bill is signed into law, and whether any additional guidance is provided by the Illinois legislature.

NLRB Issues an Advice Memo Regarding Non-Compete Agreements.

On June 26, 2026, the National Labor Relations Board (“NLRB”) Division of Advice (“Advice”) issued an advice memorandum regarding the lawfulness of certain non-compete agreements. At issue in the cases presented were, among other restrictive covenants, a non-compete agreement prohibiting former employees from working for the employer’s competitors or using the employee’s knowledge of the employer’s confidential information for a period of six months following termination of employment.

Advice found that “The General Counsel is of the view that non-compete agreements do not as a general matter impact employees’ rights under Section 7 of the National Labor Relations Act (“NLRA”), and accordingly found that the non-compete provisions presented in the cases did not violate the NLRA.

Advice’s position is a departure from the previous NLRB General Counsel’s position taken in 2023 that overbroad non-compete agreements may violate the NLRA because they may chill employees from exercising their Section 7 rights. Advice memos are not legally binding, but do indicate the NLRB’s current view in particular matters. The NLRB’s position on non-compete agreements does not, however, determine the enforceability of non-compete agreements under state law.

If you have any questions about navigating the latest developments in the labor and employment landscape, please contact Kristin Michaels or your Neal Gerber Eisenberg attorney.

This alert is a monthly labor and employment legal update from Neal Gerber & Eisenberg’s Labor & Employment team. Our practice group partners with employers of all sizes to help anticipate, manage, and develop practical solutions to labor and employment issues at both the national and local levels.

This Alert Was Authored By

Alex Dominguez | 312.269.8476 | adominguez@nge.com

Alissa Griffin | 312.269.2908 | agriffin@nge.com

Kristin Michaels | 312.269.5328 | kmichaels@nge.com

Sonya Roseberg | 312.827.1076 | srosenberg@nge.com

Bill Tarnow | 312.269.8489 | wtarnow@nge.com

The content above is based on information current at the time of its publication and may not reflect the most recent developments or guidance. Please note that this publication should not be construed as legal advice or a legal opinion on any specific facts or circumstances. The contents of this publication are intended solely for general purposes, and you are urged to consult a lawyer concerning your own situation and any specific legal questions you may have.

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