Key US employment law issues of concern to Chinese employers in 2026: a strategic update

Philip M. Berkowitz

Littler Mendelson PC, New York

pberkowitz@littler.com

Jerry (Gongyu) Zhang

Littler Mendelson PC, New York

jezhang@littler.com

Introduction

US employment law continues to evolve rapidly, shaped by heightened regulatory enforcement, technological change, shifting workforce expectations and broader geopolitical pressures. For Chinese companies operating in or expanding into the US, employment-related decisions affecting US personnel often carry consequences that extend beyond local HR management and into corporate governance, regulatory disclosure and reputational risk.

Unlike jurisdictions with centralised employment regulation, the US operates under a layered system of federal, state and local laws. China‑headquartered enterprises – particularly those still building US compliance infrastructure – often encounter these risks for the first time when disputes arise, whether through immigration authorities, labour regulators, anti-discrimination agencies and sector-specific enforcement bodies. At the same time, employees enjoy broad access to private litigation, making employment disputes a frequent source of risk.

This article examines five areas where these dynamics are currently most visible: (1) the shift on DEI programmes; (2) immigration enforcement; (3) employee data protection; (4) return-to-work policy; and (5) whistleblower claims. Each section focuses on practical implications for employers rather than technical doctrine, with particular attention to issues that commonly arise for multinational businesses.

The shifting DEI landscape

Diversity, equity and inclusion (DEI) programmes have increasingly come under legal and political scrutiny in the US. Enforcement agencies and private litigants have challenged employer DEI programmes under theories of reverse discrimination, improper preferences and alleged violations of antitrust and consumer‑protection laws. Recent enforcement actions – including the Equal Employment Opportunity Commission’s (EEOC) subpoena enforcement targeting Nike’s DEI‑related hiring and promotion practices – highlight the degree to which DEI programmes are now subject to systemic discrimination investigations.[1]

At the same time, federal authorities have sharpened the scrutiny of employer coordination around DEI metrics, illustrated by recent FTC warning letters to more than 40 US law firms regarding potentially anticompetitive DEI‑based hiring standards.[2] Littler’s analysis reflects that employers are increasingly bracing for a broader anti‑DEI crackdown, with many anticipating heightened federal enforcement and rising litigation risk tied to DEI frameworks.[3] According to Littler’s Annual Employer Survey,[4] concerns about DEI‑related litigation have grown significantly, with nearly half of surveyed employers identifying DEI as an area of potential exposure for 2025.[5]

It is important understand that, in all but the rarest circumstances, US law prohibits quotas and numerical goals based on protected status. For multinational employers, particularly those with global DEI frameworks, these developments underscore the importance of reviewing DEI initiatives for compliance with US anti‑discrimination law, ensuring programmes remain grounded in lawful, business‑driven objectives and assessing whether programme language or implementation practices could be construed as conferring prohibited preferences.

Immigration enforcement and employer compliance

Under the new administration, immigration compliance has become a central concern for US employers as enforcement authorities increasingly focus on employer conduct rather than solely on individual immigration violations. Worksite investigations and Form I-9 audits remain the primary enforcement tools, but recent activity reflects a broader strategy of holding employers accountable for technical non-compliance, recordkeeping deficiencies and inconsistent verification practices.[6] Recent enforcement actions illustrate the heightened risks for multinational employers relying on foreign‑national workforces. For example, widely reported federal enforcement activity at a major Asia-based car manufacturing facility in Georgia, resulting in the detention and departure of foreign engineers, demonstrates how worksite investigations can escalate quickly and carry operational and diplomatic consequences for international companies.[7]

For Chinese employers, immigration risk often arises not from intentional violations but from administrative errors or well-intentioned practices that inadvertently create legal exposure. Employers may face penalties for incomplete or improperly completed I-9 forms, failures to reverify work authorisation in a timely manner or inconsistent retention of documentation. These issues are often discovered during routine audits or through information sharing between government agencies.

At the same time, immigration compliance is closely linked to anti-discrimination obligations. US law prohibits employers from treating employees differently based on citizenship or national origin, even when attempting to comply with immigration requirements. Practices such as requesting additional documents from non-US citizens, selectively re-verifying foreign nationals or applying different standards based on nationality can trigger enforcement actions.

This balance is particularly sensitive for employers with foreign nationals, visa-dependent employees or international assignees. Visa processing delays, heightened security reviews and evolving policy guidance can create operational pressure, increasing the risk that managers or HR personnel take inconsistent or overly cautious actions.

Recent US case law also underscores that cultural or linguistic differences in the workplace do not automatically translate into unlawful discrimination. In Kurtanidze v Mizuho Bank Ltd, a federal court held that the use of a foreign language in business meetings did not, by itself, constitute national-origin discrimination.[8] The court emphasised that language choice is distinct from protected characteristics and that US law does not require employers to conduct all business in English. As discussed in a prior commentary, this decision illustrates the nuanced approach US courts take when evaluating claims arising from multicultural workplaces, particularly in international business settings.[9]

For Chinese companies, the lesson is twofold. Immigration compliance must be handled carefully, but employers should also avoid assuming that cultural accommodation requirements extend beyond what the law actually mandates. Clear policies, consistent practices and regular training remain the most effective risk-management tools.

Cybersecurity and employee data protection

Cybersecurity has become a core employment law issue as employers increasingly collect, store and analyse large volumes of employee data. Personnel records commonly include sensitive personal information, compensation data, health and benefits records, immigration documentation and performance evaluations. Data breaches involving employee information now routinely result in regulatory investigations, notification obligations, civil litigation and reputational harm.

Unlike many jurisdictions with comprehensive national data-protection regimes, the US relies on a patchwork of federal and state laws.[10] Many states impose breach-notification requirements and mandate reasonable security measures for personal data.[11] Employers operating in multiple states must therefore navigate overlapping and sometimes inconsistent standards, increasing compliance complexity.

The risk landscape is further complicated by the growing use of workplace monitoring tools and artificial intelligence (AI) in employment decision-making.[12] Employers increasingly rely on digital systems to track productivity, evaluate performance, screen applicants and manage remote or hybrid workforces. These technologies raise questions about transparency, employee notice, data retention and potential bias.

For China-based employers, employee data protection also intersects with cross-border data transfer considerations and broader regulatory scrutiny of international data flows. Employment data, once viewed as routine HR information, may now fall within broader cybersecurity frameworks.

From an employment law perspective, employers should treat employee data as a high-risk asset. Coordination between legal, HR, IT and compliance teams is essential to ensure that data-security practices align with both employment obligations and broader corporate governance standards.

Return-to-work policies and workforce management

As US employers reassess remote-work arrangements, return-to-office and hybrid policies have emerged as a significant source of legal and operational risk. Littler’s 2025 Annual Employer Survey found that as employers increase in‑office requirements, 56 per cent have seen a rise in requests for remote–work accommodations, many tied to the Americans with Disabilities Act (ADA) and mental‑health issues.[13] While many employers view in-person work as critical to collaboration and supervision, employees increasingly challenge return-to-work mandates through accommodation requests, discrimination claims and retaliation allegations.

Disability and medical accommodation obligations remain a central concern. Employers must engage in an individualised, interactive process when employees request continued remote work as an accommodation. Blanket policies that fail to account for individual circumstances may expose employers to liability, even where business justifications exist.

Return-to-work policies also raise wage-and-hour and expense-reimbursement issues. Certain jurisdictions require employers to reimburse employees for necessary business expenses, which may include costs associated with commuting, relocation or worksite transfers.[14] Employers must also consider how travel time, overtime rules and scheduling changes affect compliance.

Beyond legal exposure, return-to-work decisions have broader implications for morale, retention and recruitment. For multinational employers, aligning US workplace expectations with global policies can be particularly challenging, as cultural norms and regulatory requirements vary significantly across jurisdictions.

Effective return-to-work strategies therefore require more than policy announcements. Employers should document business justifications, apply policies consistently, train managers on accommodation obligations and remain attentive to employee concerns that may later form the basis of legal claims.

Whistleblower claims and retaliation risk

Whistleblower protections in the US have expanded substantially over the past decade, with federal and state laws now covering an increasingly wide spectrum of employer conduct, including wage‑and‑hour compliance, workplace safety, discrimination, securities regulation, environmental obligations and broader corporate‑governance issues. These legal developments have been accompanied by a series of high‑impact judicial decisions that continue to lower the evidentiary burden for whistleblowers. For example, the US Supreme Court has held that an employee bringing a Sarbanes‑Oxley (SOX) retaliation claim need not prove retaliatory intent, but only that their protected activity was a ‘contributing factor’ in the adverse action – significantly increasing employers’ exposure to liability.[15] Importantly, many whistleblower statutes protect internal complaints, not just reports to government agencies. As a result, routine HR or compliance concerns may later be characterised as protected activity. Adverse employment actions taken after such complaints frequently give rise to retaliation claims, even where the underlying complaint is ultimately unsubstantiated.

For multinational employers, whistleblower risk is heightened where employees raise concerns related to cross-border compliance, sanctions exposure, data protection or regulatory reporting. Investigations may involve multiple regulators and generate obligations that extend beyond the employment relationship.

Regulatory agencies actively investigate retaliation claims, and remedies may include reinstatement, back pay, compensatory damages, attorneys’ fees and, in some cases, monetary awards to whistleblowers. These developments underscore the importance of treating whistleblower management as a governance issue rather than a purely legal or HR function.

Practical considerations for China-based in-house counsel

For China‑headquartered enterprises, US employment law disputes often arise not as isolated HR matters, but in parallel with broader regulatory, data‑governance and geopolitical considerations. Chinese companies new to the US legal environment may underestimate the degree to which local employment decisions are scrutinised independently of home‑country business practices or legal constraints. China-based in-house counsel should therefore ensure close coordination with US employment counsel when addressing workforce decisions affecting US employees. Employment compliance should be integrated into enterprise risk-management frameworks, with particular attention to documentation, internal reporting and investigation protocols. Early legal involvement is often critical to mitigating exposure and avoiding escalation.

Conclusion

US employment law presents a complex and evolving risk environment for multinational employers. Immigration enforcement, cybersecurity obligations, return-to-work policies and whistleblower protections reflect broader regulatory trends that increasingly treat employment practices as matters of public concern and corporate governance.

For China-based employers, proactive risk assessment, consistent policy implementation and cross-border coordination are essential. Organisations that approach employment law as a strategic governance function – rather than a reactive HR issue – will be better positioned to manage regulatory exposure, protect reputation and maintain workforce stability in the US.