By Richard I. Lehr, Esq.

As January ends, there are new laws and regulations that have come into effect on both the national and state levels that retail businesses should be aware of, along with a few trends in employment law that are worth noting for 2026.

Nationally

Artificial Intelligence. We continue to see the rapid growth and development of Artificial Intelligence (“AI”) and fears of jobs being replaced by technology. An analysis by the University of San Diego identified the industries where job automation is most likely to result in a transformative decline of jobs: Customer service and experience, banking and insurance, and transportation. In all three sectors, we’ve experienced how AI has reduced the point of contact with people. In customer service, we’re given prompts that seem to take forever before we speak to someone. Employers should be transparent regarding AI plans. Otherwise, employees will seek their own answer to whether AI will replace them, and that answer is likely to be alarmist and incorrect.

Tips, Bonuses, and Hours Worked. The Department of Labor has issued two Opinion Letters regarding tips and bonuses. In the first letter, the Wage and Hour Division explained that tips may be counted if the employer takes advantage of the tip credit, but only up to the difference between the tip credit wage and the minimum wage. Any amount over that difference is excluded from analysis. In the second letter, the Wage and Hour Division reaffirmed that bonus payments for meeting predetermined criteria (safety goals, production targets, etc.) must be included in the computation of the regular rate (which is used to determine the overtime rate). WHD reiterated that only truly discretionary bonuses determine after-the-fact, may properly be excluded from the regular rate computation.

In another Opinion Letter, when asked if a mandatory 15-minute roll call prior to each shift is classified as “hours worked” under the FLSA, the WHD reaffirmed that “all time an employee is required to be on duty, on the employer’s premises, or at a prescribed workplace is considered hours worked.”

FMLA. The Wage and Hour Division also issued an Opinion Letter addressing whether travel time to or from a medical appointment can be used under the employee’s FMLA time. The WHD determined that “an eligible employee may use FMLA leave that counts against his or her FMLA entitlement to travel to or from a medical appointment for a serious health condition, whether or not the medical certification indicates the need for, time required, or other particulars of, such travel time.”

EEOC “Reverse” Discrimination Claims. Last year, the Supreme Court’s unanimous decision in Ames v. Ohio Dept. of Youth Services removed the “background circumstances” rule for “reverse” employment discrimination cases. In the past few weeks, President Trump and other top officials have been encouraging White males to file reverse discrimination claims. Andrea Lucas, the acting EEOC Chair, recently said on X, “Are you a white male who has experienced discrimination at work based on your race or sex? You may have a claim to recover money under federal civil rights laws.” There’s no way to tell if or when we could see an influx of “reverse” discrimination claims being filed, but it is something to keep an eye out for.

Alabama

Non-Resident Income Tax. Act 2025-334 went into effect on January 1 and exempts non-resident employees from state income tax and payroll withholding that work in Alabama for 30 days or less so long as they meet certain requirements such as: wages were for job responsibilities performed in Alabama for 30 or less days in the calendar year; the employee worked in more than one state during the calendar year; and the employee’s home state either provides a “substantially similar exclusion” or doesn’t impose an individual income tax, or the employee’s income is otherwise tax exempt under Alabama or federal law.

Hemp Products. Also beginning January 1, any retailer which sells consumable hemp products must apply for a license with the Alabama Beverage Control board under House Bill 445. Retailers who have a license to sell hemp products must also ensure that the products meet serving size and product content requirements (§28-12-23) and labeling requirements (§28-12-25). Retailers who sell hemp products without a license from the ABC board are subject to the following penalties: first offense – $1,000 fine; second offense – $2,500 fine; and third offense – $5,000 fine and possible revocation of the retailer’s license.

Companies should always strive to stay informed of employment law and policy changes throughout the year both in Alabama and federally. If you have any questions or would like additional information, please contact Richard Lehr at (205) 323-9260 or rlehr@lehrmiddlebrooks.com.

Richard is a founding members of Lehr Middlebrooks Vreeland & Thompson PC. The Birmingham labor and employment law firm provides information for Alabama Retail’s Employment Law Resource Center. 

Learn more about LMVT and the services it offers to Alabama Retail Association members