Why your employee handbook might need updating before January

If your employee handbook hasn’t been reviewed since it was written, it may contain policies that no longer match what the law requires or what your business actually does in practice.

Employment laws changed at both the federal and state level in 2026. The standard federal salary threshold for many executive, administrative and professional exemptions reverted to $684 per week after the 2024 rule was vacated. Several states expanded paid leave requirements. New pay transparency laws took effect in multiple states. And if your team uses AI tools in hiring or day-to-day work, you likely have no written policy covering that.

An outdated handbook creates two problems. If your written policies say one thing and your actual practice is something different, that inconsistency weakens your position in any employment dispute. And a handbook that doesn’t reflect the anti-harassment, leave or other requirements that apply to your business can expose you to fines, regulatory complaints or increased liability in a lawsuit.

You don’t need to rewrite the whole thing. Focus on the sections that carry the most legal weight: your at-will employment language, anti-harassment and discrimination policies, leave policies, wage and hour classifications and any technology or AI use guidelines.

If your handbook is more than a year old and hasn’t been reviewed against current law, reach out and we’ll help you to identify what needs updating before January.

The overtime salary threshold is back to $684 a week: Here’s what that means

In May 2026, the Department of Labor formally restored the 2019 FLSA salary threshold of $684 per week ($35,568 per year) for many executive, administrative and professional exemptions. The 2024 rule that raised it to $844 per week was vacated by a federal court in late 2024 and the DOL has now updated its regulations to reflect that decision.

If you raised salaries or reclassified employees in 2024 to comply with the higher threshold, those changes are still in effect. The federal change does not require you to reverse them. But review whether they still make sense now that the higher federal threshold is gone.

The duties test still applies regardless of salary. An employee earning above $684 per week is only exempt if their actual job duties meet the executive, administrative or professional criteria. A job title alone does not determine exempt status.

If you haven’t reviewed your classifications since 2024, do it before year-end payroll closes.

$300,000 EEOC settlement shows the cost of firing employees on prescription medication

In April 2026, a Tennessee-based manufacturer settled an EEOC lawsuit for $300,000 after the agency alleged it had fired or otherwise denied employment opportunities to workers who were lawfully taking prescription medications for disabilities, even after they had been medically cleared to do their jobs.

The EEOC alleged that the company failed to individually assess whether employees could safely perform their duties while on medication. Instead, it applied a blanket policy that treated prescription medication use as grounds for removal.

The settlement requires the company to adopt new accommodation policies, train supervisors, track disability accommodation requests related to medication and report to the EEOC for five years.

If someone on your team appears drowsy, confused or is behaving unusually, don’t jump to conclusions about why. Address the performance or safety issue you’re actually seeing.

If a medical condition or accommodation comes up, handle it individually. Blanket rules and assumptions about prescription medication can create ADA risk.

If you don’t document it, it didn’t happen

In most states, employment is at-will, meaning that you can end the relationship for any reason that isn’t prohibited by law. But at-will status alone won’t protect you if a terminated employee files a discrimination or retaliation claim.

When that happens, the first thing their attorney will request is your documentation. If you had conversations about performance or conduct but never wrote them down, your evidence is significantly weaker. That makes it harder and more expensive to defend the decision, even if the termination was legitimate.

You don’t need a complex system. A dated email to yourself summarizing what was discussed, what the expectations are going forward and what was agreed can provide a basic record. The key is doing it consistently, for every employee, every time.

If you’re already having those conversations when problems arise, you’re doing the hard part. Writing them down is what turns a conversation into a defensible record.

Your holiday party is a harassment liability event

A company holiday party may be outside the office and after hours, but that doesn’t mean workplace harassment rules stop applying.

Employer-sponsored social events can be treated as extensions of the workplace, especially when attendance is encouraged, the company organizes and pays for the event or it’s marketed as a team or company function. This means that your anti-harassment policies can apply to what happens there, even if it’s offsite and after hours.

If an employee is harassed at your holiday party, the company could face liability depending on who was involved and how you responded. For harassment by a supervisor, employers can be held liable even without prior knowledge. For harassment by coworkers or non-employees such as clients, vendors or guests, the standard is whether you knew or should have known and failed to act.

Either way, what you did before the event matters as much as how you respond after.

Here are four things to put in place before any company social event this season.

1. Remind all employees in writing that your anti-harassment policy applies at company events, including after hours.
2. Brief your managers on what to watch for and how to respond if something happens.
3. Make sure that employees have a clear way to report an incident, including outside normal working hours.
4. Follow up after the event. If something is reported, act on it promptly and document what you did.

These steps won’t eliminate all risk. But they show that you took the obligation seriously and that matters if a claim is ever filed.

If you’d like help with putting this in place before your holiday event, reach out.

Q&A

Can I eliminate a position and offer the employee a different role?

Generally, yes, as long as the decision is based on a legitimate business reason and applied consistently.

If you’re restructuring and the new role has different responsibilities or lower pay, be clear about the business rationale and document it. The employee can accept the new role or decline it.

Where employers get into trouble is when the restructuring looks like a pretext. If the “new” role is substantially the same job with worse pay and there is no clear business reason, or if employees are selected because of a protected characteristic, that opens the door to a discrimination claim.

Should I do anything to prepare for our holiday party?

Yes. A company-sponsored social event can be treated as an extension of the workplace, even if it takes place offsite and after hours. Your anti-harassment policies can still apply.

Send a written reminder that your policy covers company events, brief your managers on how to respond to an issue, set expectations around alcohol and make sure that employees know how to report a concern. Make sure that you keep a copy of whatever you send.

What should I do if an employee tells me that they are experiencing domestic violence?

There’s no single federal law requiring a domestic violence workplace policy. However, federal anti-discrimination, disability and leave laws may apply depending on the circumstances. Some state or local laws may also provide additional protections.

Respond with confidentiality and without judgment. Consider whether workplace adjustments would help, such as a schedule change, a workspace relocation, an updated emergency contact or adjusted security procedures.

Connect them with support resources. The National Domestic Violence Hotline (1-800-799-7233) is a good starting point.