The first year of President Donald Trump’s second term has brought significant workplace disruption, with employers citing immigration policy changes, DEI scrutiny, and regulatory volatility as major forces reshaping workforce decisions.
That is according to a new survey from the Littler Workplace Policy Institute, which polled more than 300 in-house counsel, HR leaders, and C-suite executives across industries nationwide. The findings show how federal and state policy changes are influencing staffing, hiring, compliance, and workforce planning.
DEI and Immigration Drive the Largest Impacts
Among respondents, 71% said changes related to diversity, equity, and inclusion policies affected their organizations over the past year. Immigration policy changes followed closely at 65%.
Large employers—those with more than 10,000 workers—reported even greater exposure. Eighty-six percent cited impacts tied to DEI changes, while 79% pointed to immigration-related effects.
Technology and retail or hospitality employers were especially likely to report workforce consequences from immigration shifts, with 81% in each sector saying their businesses were affected.
The administration moved early in its term to curtail DEI programs in the federal government and reverse certain affirmative action requirements for federal contractors. Federal agencies were also directed to scrutinize private-sector DEI initiatives. In parallel, changes to immigration policy have created staffing challenges for employers reliant on global talent pipelines.
Staffing Challenges and Hiring Pullbacks
Sixty-three percent of employers surveyed said their organizations experienced workforce staffing challenges linked to immigration policy changes. Among large employers, that share rose to 75%.
Some organizations reported adjusting hiring practices in response, including limiting or reducing immigration sponsorship programs.
Beyond immigration, broader regulatory and economic uncertainty has translated into workforce reductions. Thirty-five percent of respondents said their organizations implemented job cuts as a result of shifting policy and economic conditions. Thirty percent paused or scaled back hiring.
Manufacturing employers reported above-average workforce impacts, with more than four in ten indicating reductions in headcount or hiring slowdowns.
The findings reflect uneven labor market effects. While some large corporations and technology firms have reduced staff, other sectors, including healthcare, continue to report hiring strength or talent shortages.
State Laws Add Compliance Pressure
Even as federal workplace regulation has shifted, state and local governments have expanded activity. Nearly nine in ten employers reported being affected by new or revised workplace laws at the state or local level over the past year.
Among those impacted, 67% cited paid leave requirements as the most significant area of change. Pay transparency and equity laws followed at 51%, data privacy at 47%, and regulations governing AI use in employment processes at 41%. Large employers were more likely to report AI-related compliance impacts.
The result is an increasingly complex regulatory landscape for multi-state employers, requiring adjustments to policies governing compensation, leave, hiring practices, and workplace technology.
Federal Agencies Poised for More Activity
While much of 2025 centered on executive actions and policy changes, attention is turning to federal agencies expected to increase activity in 2026.
The Equal Employment Opportunity Commission has regained a quorum, potentially paving the way for new enforcement priorities. The National Labor Relations Board may revisit rulemaking on worker classification and union procedures. The United States Department of Labor has also signaled interest in rules affecting worker classification, joint employment standards, and federal contractor wage requirements.
Workforce Strategy in a Volatile Policy Era
Immigration constraints, DEI scrutiny, AI-related compliance requirements, and state-level legislation are influencing hiring models, talent pipelines, and operational planning. As regulatory conditions continue to evolve, businesses appear to be recalibrating staffing levels, sponsorship policies, and compliance investments in response.
