Emerging Labor and Employment Trends in the Construction Industry

The construction industry has always operated at the intersection of demanding timetables, volatile market conditions and complex labor dynamics, and aggressive regulatory oversight. Emerging trends, including uncertainties surrounding the National Labor Relations Board (the Board), the proliferation of A.I. (particularly in employment decisions), increased scrutiny of classification of workers as independent contractors, and market pressures that may necessitate layoffs and restructuring, make navigating the labor and employment landscape more complicated than ever.

NLRB Developments (or Lack Thereof)

There is always a change of course between presidential administrations on the Board. At the beginning of 2025, we expected to see perhaps the most dramatic reversal in the Board’s history of union-friendly Board rules and decisions, particularly following the conclusion of a series of decisions arising out of Cemex Construction Materials Pacific, LLC v. NLRB.[1] The result of Cemex leaves employers with the difficult choice of either recognizing and bargaining with a union designated by a majority of employees as their representative, or promptly file an RM petition. However, rather than implementing the traditional channels for reversing prior administrations’ priorities or decision-making, the Trump administration sought to dismantle the Board entirely. First, the administration’s DOGE initiative gutted much of the Board’s investigative and enforcement capabilities, causing the processing of cases to grind to a halt in most Regions. Trump’s next step was to fire Member Gwynne Wilcox, leaving the Board without a quorum for most of 2025. These actions were taken despite ever-increasing petitions and charges complaining of unfair labor practices, and leaves the Board without the ability to reverse precedent. For employers, the unfavorable law remains on the books, but without anyone to enforce the laws. Until any NLRB precedent is officially overturned, employers should continue to follow the current framework established by the Board’s decision in Cemex.

There is a possible light for employers. In December 2025, the Senate confirmed two new Board members and a new General Counsel. In February of 2026, the D.C. Circuit declined to rehear en banc the decision affirming Wilcox’s dismissal from the Board. So, for now, Wilcox remains off the Board (pending Supreme Court intervention); but with the confirmation of two new members, the Board has its quorum and may issue rules and decisions.   

First on the chopping block is likely Cemex. In that case, the union presented the employer a bargaining demand and authorization cards showing majority support for the union. Rather than voluntarily recognizing the union, the employer insisted on a secret ballot election. The Board held that even in the absence of a Board petition, if a union demonstrates majority support and if the employer commits unfair labor practices during the pendency of the election, the Board may issue a bargaining order for the employer to negotiate a collective bargaining agreement with the union without conducting an election. Where the election period had previously offered employers a buffer to engage in fact-based discussions about the pros and cons of unionization, careless acts by employers may result in a union contract nobody actually wants.

In late 2024, the Board issued rules compressing timelines for union elections and post-election hearings. The result has been a process in which initial excitement and momentum about unionizing carries through the election and challenge period, rather than a slower, more deliberate process in which employers can provide their input. The Board also issued a heavily criticized rule limiting employer “captive audience” meetings during union organizing campaigns. In an industry in which foremen are considered part of management and may bind the company, employers could potentially incur liability by off-hand statements made in mandatory shift meetings. We can expect both rules to be rescinded, allowing employers to provide its employees factual information about the flipside of unionization.

Artificial Intelligence Opportunities and Risks (and How to Mitigate Risks)

At the end of 2025, we saw an unexpected “battle of the bots” in the hiring process, where candidates were using A.I. to submit numerous job applications and employers were also using A.I. to screen through the flood of applications. While applicants may not be concerned with the use of A.I. in hiring, employers should be wary. Although A.I. holds remarkable promise in streamlining and optimizing hiring, discipline, pay matrices, performance metrics, allocation, and many other applications, there is also significant legal risk.

The EEOC and various state human rights commissions have issued warnings that employers are responsible for discrimination that is committed by an A.I. program to the same extent as if the discrimination was committed by a human. As a result, employers should maintain healthy skepticism about use of A.I. products in employment decisions, including when provided by third-party vendors. To that end, employers should apply the same procurement principles to A.I. as they would to any materials and systems they would employ on their most important projects.

At a minimum, savvy employers should require vendors to explain, in plain terms, how their algorithms work, require bias testing with open methodology regarding protected characteristics, and have key stakeholders (e.g., Chief information Officer and legal and HR departments) involved in verification of bias testing. For example, the A.I. program should be able to show from where it is pulling data, factors the algorithm is evaluating, and verifiable outputs. These outputs should then be compared with known demographic data to discern whether the algorithm is intentionally or unintentionally discriminating.

Employers should also be wary of how A.I. programs may use proxies for race to unintentionally discriminate or create disparate impact claims. Disparate impact is when a neutral factor in employment decisions unintentionally falls more harshly one protected group than another, without business justification. The EEOC has largely disclaimed disparate impact as a viable legal theory, but these claims remain viable under state law. For example, A.I. bots scanning résumés for typos may screen out applicants with foreign names or unusual spellings. Similarly, bots that pull only from highly ranked colleges may produce hiring results that do not reflect the labor market.

Classification of Workers

Another swinging pendulum has been classification of workers as employees versus independent contractors. In 2026, we can expect that at the federal level, the Board’s rule which focuses on a worker’s “entrepreneurial opportunity,” or the worker’s ability to profit on their labor, is likely to expand to other areas, including wage and hour and benefits. Generally, this test has been friendlier to employers than the common law “economic realities” test, which focuses more on a worker’s reliance on an employer. 

At the state level, it is unsurprising that there will be wide variances depending on the state. But bipartisan skepticism about the tech and gig industries and use of independent contractor relationships to avoid liability has created a backlash and call from some sectors to classify more workers as employees. We can expect more states to adopt stricter tests, such as the “ABC” Test, which focuses on the extent to which an employer can control a worker’s means and methods. These tests have tended to favor workers where an employer maintains some element of control over how the work is done.

In the construction industry, arrangements such working foremen who receive 1099s, certain equipment operators or owner-operators, or long-term subcontractors with exclusive arrangements for a particular general contractor may all draw increased scrutiny. The combination of the federal government’s lax approach, growing labor movement, and unpredictable state-level politics make the independent contractor classification a key candidate for increased focus in the years to come.

Tariff Pressures and Layoffs

In February of 2026, the Supreme Court held that many of the tariffs established by the Trump administration in 2025 were unlawful under the International Emergency Economic Powers Act. Collected tariffs were estimated to amount to more than $200 billion. Whether refunds will be issued remains to be seen, but Trump quickly responded by instituting additional tariffs under a different law. We can anticipate that tariffs will remain top of the President’s mind going forward. Therefore, employers should begin planning now to respond in the event tariffs potentially lead to changes in the terms and conditions of employment, including reduction of hours or overtime, changes to project timelines, and potentially layoffs. 

If layoffs or reductions in force are necessary based on tariff, inflation, or other market pressures, employers must navigate three separate and critical schemes with potentially cataclysmic effects in the event of a misstep. First, layoffs and changes to working schedules are likely mandatory subjects of bargaining. The CBA may or may not reserve the decisions to management, but employers must also be mindful of “effects” bargaining obligations. Seniority and other procedures for layoffs, reassignment, and bidding must be administered in a nondiscriminatory manner.  Next, outside of the union context, employers considering reductions in force face a minefield of potential discrimination claims. Large scale reductions in force should be carefully planned and administered with assistance of counsel. Finally, the federal Worker Adjustment and Retaining Notification (WARN) Act has notice requirements in advance of layoffs or closures. State “min-WARN acts” may also apply to impose additional requirements.

Conclusion