STAFFING INDUSTRY OUTLOOK: COMPLIANCE
If you hire workers — directly, through a staffing firm, or both — hiring compliance 2026 is bringing a wave of legal exposure that’s easy to miss if you’re not watching closely. Here’s what’s changed, and what it means for your business specifically.
This piece was inspired by insights shared by Stephen Dwyer, President and CEO of the American Staffing Association, in a recent industry briefing. Lloyd Staffing is a longstanding member of the American Staffing Association and adheres to its commitment to promoting high standards of legal, ethical, and professional practice across the staffing industry. Learn more about ASA’s standards at https://americanstaffing.net/asa/. Lloyd’s recruiters are nationally certified staffing professionals.
.
I-9 Enforcement Has Intensified Sharply
This is the most immediate risk. Immigration enforcement analysts estimate ICE conducted somewhere between 12,000 and 15,000 Form I-9 audits in 2025 — roughly a tenfold increase over the year before — and that pace has continued into 2026. Employment law firm Littler Mendelson has also flagged that ICE’s revised guidance now reclassifies many former “technical” I-9 errors as substantive violations, with no cure window, and has specifically called out staffing arrangements as one of the areas drawing disproportionate enforcement attention.
What this means for you: I-9 compliance mistakes that used to be minor, fixable oversights can now trigger real financial exposure, with per-violation fines regularly reaching into the thousands of dollars. If you’re weighing whether to manage recruiting fully in-house, this is exactly the kind of exposure a staffing partner who handles I-9 compliance daily is built to absorb on your behalf.
New State Tax Rules Are Changing What Hiring Costs
Hiring compliance 2026 isn’t only federal. Washington State began taxing temporary staffing services as a retail sale in October 2025, adding sales tax and B&O tax on top of existing costs; lawmakers have since voted to roll most of that back starting in 2029, but it remains in effect for staffing until then. Maryland, by contrast, kept staffing out of its new sales tax structure entirely. If you operate across multiple states, this is a landscape that needs active tracking, not a once-a-year policy check.
New Jersey has also enacted a new employer assessment: companies with more than 50 employees on Medicaid will be charged a per-person fee starting in 2026, though temporary and seasonal employees are carved out . If you use contingent staffing in New Jersey, that carve-out is worth knowing before it affects your budget.
AI Hiring Law Is Still Taking Shape
Colorado’s original AI law — the most sweeping in the country — was set to take effect in mid-2026 but has been replaced with a narrower version, delaying the effective date to January 1, 2027, and scaling back requirements to focus on notice, disclosure, and human review rather than full risk-management programs. If you use AI tools anywhere in your hiring process and touch Colorado residents, you’ll eventually need to provide clear notice and allow human review of adverse decisions — and other states are watching Colorado closely as a model for their own laws.
For now, AI hiring law is a patchwork rather than a settled framework. What’s compliant in one state may not be in another, and that’s unlikely to change soon.
What This Means to Employers
None of this is meant to cause alarm — it’s meant to make the case for not treating hiring compliance as a once-a-year checklist item. I-9 compliance, state tax rules, and AI hiring law are all moving targets right now, and staying current on all three at once is a full-time job in itself.
That’s exactly where a real staffing partner earns its value: not just finding you candidates, but absorbing this kind of regulatory tracking so you don’t have to become a compliance expert on top of running your business. At Lloyd Staffing, this is the work we do every day for employers nationwide — reading these changes as they happen and building hiring strategies that hold up under them.
Let Lloyd help you recruit and retain qualified, compliant Talent for your workforce.
Complete our Request Talent query to launch your search and we will have one of our Lloyd recruitment professionals reach out to you.
If you are a candidate seeking career support, Search our openings or contact our Headquarters location.
SOURCES
I9AuditReady, “2026 ICE Enforcement Report” — https://i9auditready.com/report/2026-ice-enforcement
Littler Mendelson, “Form I-9 Updates: ICE Sets Aside Many of the Prior Positions…” — https://www.littler.com/news-analysis/asap/form-i-9-updates-ice-sets-aside-many-prior-positions-determination-substantive
Washington State Department of Revenue, Staffing Industry Guide — https://dor.wa.gov/education/industry-guides/staffing-industry/overview
Fortune, “Some states are starting to crack down on companies that foist their workers onto Medicaid” — https://fortune.com/2026/07/02/medicaid-worker-fees-employers-new-jersey/
Littler Mendelson, “Colorado Amends its Artificial Intelligence Law” — https://www.littler.com/news-analysis/asap/colorado-amends-its-artificial-intelligence-law-substantially-reducing
Paul Hastings, “Colorado Enacts New Narrower, Less Burdensome AI Law” — https://www.paulhastings.com/insights/client-alerts/colorado-enacts-new-narrower-less-burdensome-ai-law
https://americanstaffing.net/webinars/conversation-with-ceo-stephen-dwyer/
**************
Read parts 1 and 2 of this 3-part series:
Part 1: Client Behavior is Reshaping Hiring
Part 2: Labor Market Data and Hiring