Workforce changes top lawsuit trigger, says corporate counsel

Workforce decisions have become one of the most likely paths to a class action, according to a midyear survey of corporate counsel from law firm Norton Rose Fulbright. Some 47% of respondents named workforce changes such as layoffs and policy revisions as a likely trigger of class action litigation against their organization in 2026, second only to data breaches at 51%.

The midyear findings come from a 2026 poll of 135 in-house counsel at U.S. organizations in energy, financial institutions, healthcare and technology, conducted as a follow-up to the firm’s 2026 Annual Litigation Trends Survey.

State-level employment risk

Respondents reported more growth in employment and labor dispute exposure at the state level (44%) than at the federal level (39%). The report ties that pattern to decentralized enforcement and new employment requirements passed in California, New York and other states.

“State-level employment exposure is rising as plaintiffs look to jurisdictions they view as more favorable, especially as federal interpretations shift. For multistate employers, that dynamic increases compliance complexity and forum risk in a very real way,” wrote Kimberly Cheeseman, the firm’s co-head of litigation and disputes in Houston. That leaves multistate employers managing requirements that vary by state and continue to multiply.

Read more: New state regs are a ‘blueprint’ for discriminatory AI claims

AI in hiring exposure

The survey also tracked how AI-related legal risk is materializing. In the firm’s annual survey late last year, 59% of respondents called managing AI litigation risk a challenge. By midyear, 46% reported more federal dispute exposure tied to AI and 42% cited state-level increases.

HR is a particularly vulnerable area, as some 43% of respondents expect bias or discrimination claims involving AI to increase their litigation exposure through the end of 2026, and 39% pointed to employment or workforce decisions involving AI-assisted tools.

Among organizations with more than $1 billion in revenue, the companies most likely to have deployed AI screening and workforce tools at scale, the second figure rises to 41%.
“AI-assisted hiring tools are creating real uncertainty for employers, particularly around bias and discrimination claims,” Cheeseman wrote. “The risk isn’t theoretical—it’s already being tested in courts and before the EEOC.”

Exposed industries

Energy respondents reported the highest employment and labor exposure of any sector, at 57% federally and 51% at the state level, and were the most likely to call workforce changes a probable class action trigger. The report attributes that to cyclical workforce volatility tied to commodity prices and heavy reliance on hourly workers and contractors, which raises wage and hour, overtime and classification risk.

In healthcare, employment and labor topped the list of state-level exposure at 50%, with labor shortages, contract labor and wage-and-hour complexity cited as likely factors.

What to do with this

The survey points to a growing need for earlier legal review in workforce planning. Actions such as layoffs, return-to-office mandates and benefits changes may now carry class action risk, while AI hiring and workforce tools add another layer of exposure. For HR teams, that means tighter documentation, closer coordination with counsel and more careful oversight of vendors and testing protocols.