Section 603 of the Secure 2.0 Act mandates that catch-up contributions made by certain high-income earners in employer-sponsored retirement plans must be designated as Roth (after-tax) contributions.
This rule applies to plan years beginning on or after Jan. 1, 2026.
Key highlights
Who’s affected: This impacts employees age 50 or older earning more than $145,000 in FICA wages from their employer in the prior calendar year.
Mandatory Roth treatment: These employees must make catch-up contributions on a Roth basis.
Indexed threshold: The $145,000 wage threshold will be adjusted annually for inflation.
Action items for employers
Update payroll systems: Track employee wages to determine Roth eligibility.
Communicate with employees: Educate high earners on the tax implications and benefits of Roth contributions.
Coordinate with recordkeepers: Ensure systems are ready to process Roth catch-up contributions.
Why it matters
This change supports long-term retirement planning by encouraging tax diversification. While it may increase current tax liability for some employees, Roth contributions grow tax free and offer significant benefits in retirement.
Suggested next steps
Engage your plan advisor to assess readiness.
Be on the lookout, as additional information about preparation for this provision will be provided in the coming months.
Minimum wage laws set the baseline for what employers must pay employees per hour worked. These rates can vary widely across states, cities and counties, depending largely on regional cost of living and local legislative priorities.
At the federal level, the Fair Labor Standards Act (FLSA) has governed minimum wage laws since 1938, when the first federal wage was set at $0.25/hour (equivalent to approximately $5.40 in 2023 dollars). States may adopt their own wage laws, provided they meet or exceed federal requirements.
Currently, five states – Alabama, Louisiana, Mississippi, South Carolina and Tennessee – do not have state-specific minimum wage laws and therefore follow the federal rate of $7.25/hour for covered employees. Employers with contracts at the federal, state or local levels may be subject to additional wage requirements under prevailing wage laws.
Tipped wages and tip credits
Employers in industries such as food service, where employees customarily receive tips, may be permitted to pay a lower hourly base wage as long as tips make up the difference to reach the applicable minimum wage.
Federal law allows a base wage of $2.13/hour for tipped workers, assuming actual tips received bring total earnings to at least $7.25/hour. However, some states disallow the use of tip credits or impose stricter guidelines. Employers must monitor compliance closely to avoid wage violations.
Key takeaways
Federal minimum wage remains at $7.25/hour as of 2025.
Tipped wage is $2.13/hour federally, with an allowable tip credit of up to $5.12/hour.
States and local governments may set higher rates, and many tie annual adjustments to inflation.
Tip credit laws vary significantly by state – some prohibit or restrict their use entirely.
2025 federal minimum wage overview
Category
Rate
Minimum wage
$7.25/hr
Tipped wage
$2.13/hr
Maximum tip credit
$5.12/hr
2025 state-by-state minimum wage chart
Insperity provides an up-to-date breakdown of minimum wage and tip credit rates across all 50 states and Washington, D.C. This helps ensure clients remain compliant no matter where their employees work.
Note: Some states do not permit employers to pay a reduced tipped wage. All information is current as of July 31, 2025.
2025 minimum wage increases
More than two dozen states and localities implemented minimum wage increases for 2025, reflecting inflationary pressures and cost-of-living adjustments. These include but are not limited to:
California
Colorado
Connecticut
Delaware
Florida
Illinois
Maine
Michigan
Minnesota
New Jersey
New York
Oregon
Rhode Island
Vermont
Virginia
Washington
Insperity continues to monitor wage changes to help our clients update payroll systems and remain compliant.
Frequently asked questions
Do all states have a minimum wage law? No. Five states do not have their own minimum wage statutes and instead follow the federal rate for FLSA-covered employees.
Can cities set higher minimum wages than their state? Yes. Many local jurisdictions, such as Flagstaff, Arizona, and Seattle, Washington, enforce higher wage rates than their states.
Which area has the highest minimum wage? Washington, D.C., leads with $17.95/hour. Among states, Washington ranks highest at $16.66/hour.
Which states have the lowest wage floor? Georgia and Wyoming list a state minimum of $5.15/hour – but this only applies to employees not covered by the FLSA. Otherwise, the federal rate of $7.25 applies.
Stay compliant with confidence
Managing wage compliance across multiple jurisdictions can be complex. Insperity’s team of human resources and payroll experts helps ensure your business stays aligned with changing wage laws – so you can focus on what matters most: growing your business and supporting your people.
In a move that aligns Washington with a growing number of states enhancing worker protections, Gov. Jay Inslee signed Senate Bill 5525 into law, establishing a mini-WARN Act that takes effect July 27, 2025.
The law introduces new obligations for employers planning large-scale layoffs, aiming to provide workers and communities with more time to prepare for job losses.
Key provisions of the mini-WARN law
Who’s covered: Employers with 100 or more full-time employees
Triggering events: Applies to mass layoffs involving 50 or more employees within a 30-day period, regardless of whether those employees represent a specific percentage of the workforce
Notice requirements: Employers must provide at least 60 days’ advance written notice to:
Affected employees
Any unions representing those employees
The Washington State Employment Security Department
The chief elected official of the local government where the layoff occurs
Why it matters
Unlike the federal WARN Act, which only applies to layoffs affecting 33% of the workforce or 500+ employees, Washington’s mini-WARN law lowers the threshold and broadens the scope. This means more employers will be subject to advance notice requirements, even for smaller-scale reductions in force.
Compliance tips for employers
Audit your workforce: Know if your head count meets the 100-employee threshold.
Plan ahead: Build layoff planning timelines that include the 60-day notice period.
Coordinate communications: Ensure your HR, legal and operations teams are aligned on notification procedures.
Document everything: Keep records of notices sent and received to demonstrate compliance.
Looking ahead
Washington joins 13 other states with similar laws, signaling a national trend toward stronger layoff transparency. Employers operating in multiple states should review their reduction-in-force policies to ensure compliance across jurisdictions.
Review the bill here. The information provided here is intended for informational purposes only and should not be construed as legal advice. We strongly recommend consulting with a qualified legal professional for any legal advice pertaining to your company.
Effective July 1, 2025, Montana will enforce new I-9 documentation requirements under the Legal Employment and Government Accountability Law (House Bill 226). Here’s a brief overview for employers not using E-Verify:
Key requirements
Mandatory document retention: Employers must retain copies of all I-9 supporting documents (e.g., passport, driver’s license, Social Security card) if they do not use E-Verify. This differs from federal rules, which do not require document retention.
Applies to all employers: The law is applicable to all employers in Montana, regardless of size or industry.
Verification options: Employment eligibility must be verified using either E-Verify or Form I-9 with retained supporting documents.
Enforcement and penalties: The Montana Department of Labor and Industry can conduct audits and investigations. Noncompliance may result in:
Civil penalties up to $500 per offense.
Fines of $1,000-$2,500 per unauthorized worker.
License suspensions of up to six months for repeat violations.
The information provided here is intended for informational purposes only and should not be construed as legal advice. We strongly recommend consulting with a qualified legal professional for any legal advice pertaining to your company.
Requirement one: All jobs must have an EEO category assigned.
Navigate to Client Management > Job > Jobs and ensure the EEO category is populated for all your jobs in isolved. Don’t forget to check any jobs that may be inactive as well. If the job was active in the prior calendar year, it will need to have an EEO category assigned.
Requirements two and three: All employees must have a gender and ethnic origin assigned.
An easy way to identify where updates are needed is to run the EEO-1 report. Navigate to Reporting > Client Reports and select a report category of HR – Compliance to filter your report list. Select the EEO1 Report – As-Of Date and enter the following report criteria:
As-Of Date: Enter the period end date for the payroll you select to use for EEO reporting. This pay period must fall between Oct. 1 and Dec. 31 of the reporting year.
Date Type: Select Period Ending Date.
Employees to Include: Keep the default ALL Active and Inactive employees.
Select the Employee Audit Report (Excel format).
When viewing the report, page down and you will see a list of errors that need correction:
All employees must be assigned an EEO job category.
All employees must have a gender and ethnic origin.
Update your data
Ask your employees to add missing gender or ethnic origin data through employee self-service.
For clients using the modern adaptive employee experience, employees will navigate to Personal > Personal Information > Federal Reporting > EEO to update their gender and race/ethnicity identification selections. They will be able to see their current self-reported status and make updates on any device, including phones, tablets and computers.
For clients using employee self-service in classic view, employees will navigate to Employee Self-Service > Federal Reporting Data > EEO Self-Identification to update their gender and race/ethnicity identification selections.
Please note: If an employee is uncomfortable answering the questions, they can select the option “I do not wish to disclose,” but the field cannot be left blank.
If your employees do not have access to make these updates, contact your payroll specialist and they will enable the appropriate security roles.
Ensure all work locations are tied to an establishment
Navigate to Client Management > Client Maintenance > Establishments and ensure all your work locations are tied to an establishment in isolved. If you already have an establishment created, verify that all your work locations are associated with the establishment. If you need to create an establishment, click the Add New button to create your establishment and then select the work locations that you want to tie to your establishment.
To use the isolved EEO1 Report or EEO1 Export, you need to link your work locations to EEO establishments and assign your company headquarters on the Establishments screen for accurate reporting.
If you are a multi-establishment employer, make sure you designate one of your establishments as your headquarters to enable the type 3 headquarters report.
Run your EEO-1 audit report
Run your EEO1 employee audit report again to verify all your data has been updated. Look good? Now you are ready to run your EEO1 export report. Navigate to Reporting > Client Reports and select the report category HR – Compliance to easily access the EEO-1 reports in isolved and submit your data through the EEO-1 Data Collection Portal.
For companies tracking ethnic origin, gender and EEO classifications in isolved, the EEO1 Export is formatted as a comma-delimited (CSV) file for upload to the EEO-1 Component 1 online filing system. This report is available on the Reports > Client Reports menu in the HR Compliance Reports category.
The New York City final rules on paid prenatal personal leave incorporate state-level requirements into the city’s existing Earned Safe and Sick Time Act (ESSTA). Here’s a summary of the key provisions.
Overview
Separate leave bank: Employees are entitled to a distinct bank of 20 hours of paid prenatal personal leave per 52-week calendar period.
Eligibility: This applies to all employees covered under New York State labor law, regardless of employer size.
Purpose: Leave is intended for prenatal health care and related needs before childbirth. It cannot be used for postnatal care.
Compensation: Employees must be paid at their regular rate of pay or the minimum wage, whichever is higher.
Integration with ESSTA: The rule formally integrates these state-level requirements into NYC’s ESSTA framework, ensuring consistency in enforcement and compliance.
Employer obligations: Employers must update policies, track leave separately from other sick or safe time and comply with notice and documentation rules.
The integration of New York state’s paid prenatal personal leave into the NYC Earned Safe and Sick Time Act marks a significant step forward in supporting pregnant employees. By providing a separate bank of 20 hours of paid prenatal leave, the rule ensures that expectant workers have dedicated time for essential prenatal care – without reducing their existing sick or safe leave. Employers should review and update their leave policies to ensure compliance by the Jan. 1, 2025, effective date.
The information provided here is intended for informational purposes only and should not be construed as legal advice. We strongly recommend consulting with a qualified legal professional for any legal advice pertaining to your company.
Starting July 1, 2025, Alaska will implement a new paid sick leave law as part of Ballot Measure 1, which was passed in the 2024 general election. This law requires all employers to provide paid sick leave to their employees, including part-time and overtime-exempt employees.
Key provisions
Accrual rate: Employees will earn at least one hour of paid sick leave for every 30 hours worked.
Usage: Employees can use their accrued sick leave for personal illness, medical appointments or to care for a sick family member.
Annual cap: Employees can earn up to 56 hours of paid sick leave per year.
Carryover: Unused sick leave can be carried over to the next year, but employers may cap the total accrued leave at 56 hours.
This information is provided solely for informational purposes and does not constitute legal advice or create an attorney-client relationship. Its content is general in nature and may not address individual circumstances or specific legal issues. Insperity does not interpret clients’ retirement plan documents and does not administer, have discretionary or act as a fiduciary of any client-sponsored retirement plans. For legal advice tailored to your situation, please consult with your legal counsel.
Effective July 1, 2025, Vermont’s Pay Transparency Law (Act 155) will require employers to disclose compensation or the range of compensation in written job advertisements. This law is designed to ensure equity and openness in the hiring process.
Key provisions
Disclosure requirement: Employers with five or more employees must include the expected compensation or range of compensation in job advertisements.
Applicability: The law applies to all written job advertisements for positions physically located in Vermont or remote jobs predominantly performed in Vermont.
Exemptions: Jobs paid on a commission or tipped basis must disclose that fact but are not required to list specific compensation ranges.
This information is provided solely for informational purposes and does not constitute legal advice or create an attorney-client relationship. Its content is general in nature and may not address individual circumstances or specific legal issues. Insperity does not interpret clients’ retirement plan documents and does not administer, have discretionary or act as a fiduciary of any client-sponsored retirement plans. For legal advice tailored to your situation, please consult with your legal counsel.
As of Jan. 1, 2025, California has implemented a series of groundbreaking AI regulations promoting transparency, privacy and ethical practices across various industries. These new laws position California at the forefront of AI governance, ensuring that the rapid development and integration of AI technologies are conducted responsibly.
Key highlights of the regulations
Transparency and accountability: Businesses must disclose AI system usage in decision-making to ensure awareness and accountability.
Data privacy: AI-generated data is considered personal information according to California’s data privacy laws. Businesses are required to adhere to strict data protection standards to ensure that AI systems maintain consumer privacy.
Protection against misuse: California’s laws include provisions to prevent the misuse of AI. These measures are intended to safeguard individuals and the integrity of public discourse.
Looking ahead
California’s AI regulations promote responsible AI use. Compliance helps businesses avoid legal issues and build stakeholder trust, fostering sustainable growth in an AI-driven future.
This information is provided solely for informational purposes and does not constitute legal advice or create an attorney-client relationship. Its content is general in nature and may not address individual circumstances or specific legal issues. Insperity does not interpret clients’ retirement plan documents and does not administer, have discretionary or act as a fiduciary of any client-sponsored retirement plans. For legal advice tailored to your situation, please consult with your legal counsel.
On Feb. 21, 2025, Michigan Gov. Gretchen Whitmer signed a significant amendment to the Earned Sick Time Act (ESTA), introducing several employer-friendly changes just as the law was set to take effect. This 11th-hour modification comes after a long legal battle that saw the Michigan Supreme Court rule the previous adopt-and-amend approach unconstitutional in July 2024.
Key changes to the ESTA:
Implementation timeline:
The law is effective immediately for most employers.
Small businesses with 10 or fewer employees have until Oct. 1, 2025, to comply.
Coverage and exemptions:
All employers are now covered, and there are different provisions for those with 10 or fewer employees.
New businesses are exempt for the first three years of operation.
Certain employee categories are now excluded, including those who set their own hours, unpaid interns and youth employees.
Accrual and usage:
Employees accrue one hour of paid sick time for every 30 hours worked.
Employers can opt to front-load sick time at the beginning of the year.
Usage caps are set at 72 hours per year for larger employers and 40 hours for small businesses.
Carryover and documentation:
No carryover is required if employers front-load time.
Employers using accrual methods must allow carryover of up to 72 hours (40 for small businesses).
Employees must provide documentation within 15 days if requested for absences exceeding three consecutive days.
Legal recourse:
The amendment removes the private right of action, allowing only administrative complaints for recourse.
Employers should review their current policies and make necessary adjustments to ensure compliance with the amended ESTA. It’s advisable to consult with legal counsel to navigate these changes effectively. As Michigan adjusts to the new sick leave requirements, it is essential for businesses to stay informed and ready to implement these updated regulations. The ESTA signifies a substantial change in employee benefits, seeking to offer more extensive sick leave coverage while addressing employer considerations.
