Category: Compliance Corner

Beginning Jan. 1, 2026, Minnesota will become the thirteenth state to implement a statewide Paid Family and Medical Leave (PFML) program. This initiative is designed to support employees during significant life events, such as bonding with a new child, recovering from a serious illness or caring for a loved one, while providing partial wage replacement and job protection.

With the launch date approaching, employers should begin preparing now to help ensure compliance and support their workforce effectively.

What sets Minnesota’s PFML apart?

• Inclusive coverage: It applies to nearly all workers, including part-time and seasonal employees.
• Flexible leave options: Employees may combine medical and family leave for up to 20 weeks per year.
• Generous wage replacement: This will be among the highest in the nation, with up to 90% of wages replaced.
• Universal application: Unlike the Family and Medical Leave Act (FMLA), PFML applies to all employers, regardless of size.

Key employer responsibilities

Premium collection begins January 2026

Employers must determine how to split the 0.88% payroll tax with employees. This contribution funds the PFML program and will be processed through the Minnesota Unemployment Insurance (UI) system, which most employers already use.

Quarterly wage reporting starts Q1 2026

Employers must generate the wage detail report and submit via the Minnesota Department of Employment and Economic Development UI portal. Each report must include:

• Employee names.
• Social Security numbers.
• Wages paid.
• Hours worked.

Employers not currently covered by UI (e.g., nonprofits or religious organizations) must create a “Paid Leave Only” account to comply.

Important notes

• All employees must be included in PFML wage reporting, even if only some are covered under UI.
• Premium deductions must begin Jan. 1, 2026, based on reported wages.

Employee communication deadline: Dec. 1, 2025

Employers are required to distribute PFML notices to employees by Dec. 1, 2025. These notices should explain:

• Available benefits.
• Eligibility criteria.
• How to apply for leave.

Internal communications teams should begin drafting materials now to help ensure clarity and compliance.

Leave administration planning

Employers should review and update internal leave policies to coordinate PFML with existing programs such as FMLA and short-term disability. Minnesota’s PFML allows:

• Up to 12 weeks of medical leave.
• Up to 12 weeks of family leave.
• A combined maximum of 20 weeks per benefit year.

With less than four months remaining before the initial employee notices are required, employers may consider the following actions:

• Finalize payroll tax strategies.
• Prepare wage reporting systems.
• Communicate clearly with employees.
• Align internal leave policies with PFML requirements.

For ongoing updates and official guidance, visit Minnesota’s official PFML site at mn.gov/deed/paidleave. 

Effective Jan. 1, 2026, Minnesota employers will be required to comply with updated labor standards that strengthen employee rights around meal and rest breaks. These changes were enacted as part of a broader omnibus bill and are designed to promote workplace fairness and wellbeing.

What’s changing?

Rest breaks
Employees must receive a paid 15-minute rest break for every four consecutive hours worked. This is a shift from previous standards that only required “adequate time” for restroom use without specifying duration. 

Meal breaks
Employees working six or more consecutive hours must be provided an unpaid 30-minute meal break. Previously, breaks were only required after eight hours, and the law did not define how long those breaks should be. 

Penalties for noncompliance

If an employer fails to provide the required breaks:

• The employee must be compensated for the missed time at their regular rate of pay.
• Employers could be required to pay additional liquidated damages equal to the missed compensation. 

While the law outlines these penalties, further clarification from the state is expected before the effective date to help employers understand how to calculate and administer these payments.

What Insperity HRCore™ solution clients should do

• Train managers and supervisors on the updated requirements and enforcement procedures.
• Prepare internal policies that reflect the new standards and communicate them clearly to employees.
• Monitor for additional guidance from Minnesota regulators ahead of the 2026 rollout.

Click for more information: Work breaks, rest periods | Minnesota Department of Labor and Industry.

Starting Jan. 1, 2026, Connecticut is turning up the volume on employee wellness with a major expansion of its Paid Sick Leave (PSL) law. If you’re an employer in the Constitution State (or you have remote workers based there), now is the time to prepare for a more inclusive, more protective leave landscape.

What’s changing?

Connecticut’s current PSL law applies to employers with 25 or more employees. Beginning in 2026, that threshold drops to 11 employees, and by Jan. 1, 2027, it will apply to all employers with at least one employee.

This phased rollout gives smaller businesses time to adapt, but make no mistake: The clock is ticking.

The nuts and bolts

Here’s what the updated law includes:

• Accrual rate: Employees earn one hour of paid sick leave for every 40 hours worked.
• Leave can be used for:
  • Personal illness or injury.
  • Caring for a sick family member.
  • Mental health days.
  • Safe time for survivors of domestic violence.

This expansion reflects a growing national trend toward holistic employee wellbeing and recognizing that health isn’t just physical, it’s emotional and situational, too.

Why it matters for payroll

This isn’t just an HR issue; it’s a payroll priority. Here’s why:

• Accrual tracking must be accurate and compliant.
• Leave balances must be visible and accessible to employees.
• Payout rules (especially at termination) must be clearly defined.
• Multistate employers need to ensure Connecticut-specific compliance.

What you should do now

1. Audit your head count: If you’re hovering near the 11-employee mark, start planning now.
2. Train your managers: They’ll be the first line of communication when employees request leave.
3. Revise your employee handbook: Include the new PSL policy and make it accessible.

Don’t wait for 2027

Even if you’re under the 11-employee threshold today, preparing early gives you a competitive edge. Offering PSL now can boost recruitment, retention and morale, especially in a tight labor market.

Key dates to remember

Date	What happens
Jan. 1, 2026	Law applies to employers with 11+ employees
Jan. 1, 2027	Law applies to all employers

For more information, please visit: Connecticut Paid Sick Leave Law – Legislative Report (2025-R-0016).

What’s changing?

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

1. Update payroll systems: Track employee wages to determine Roth eligibility.
2. Communicate with employees: Educate high earners on the tax implications and benefits of Roth contributions.
3. 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.

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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.

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2025 federal minimum wage overview

Category	Rate
Minimum wage	$7.25/hr
Tipped wage	$2.13/hr
Maximum tip credit	$5.12/hr

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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.

Click here to review the minimum wage by state 👉 State Minimum Wage Laws | U.S. Department of Labor

Note: Some states do not permit employers to pay a reduced tipped wage. All information is current as of July 31, 2025.

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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.

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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.

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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.

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.

The deadline to file the 2024 EEO-1 Component 1 report is Tuesday, June 24, 2025.

This applies to:

• Private employers with 100 or more employees
• Federal contractors with 50 or more employees and a qualifying contract

Who needs to file EEO-1 reports each year?

Important points

• The report collects workforce demographic data by race/ethnicity, sex and job category.
• The 2024 EEO-1 filing deadline is June 24, 2025.
• Filing is done through the EEOC’s EEO-1 Component 1 online filing system.

Required information for EEO-1 filing

You can file and find official guidance at the EEOC’s portal: EEO-1 Component 1 filing portal.

Prepare your data

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

The Establishments screen links the work locations to their respective EEO-1 reporting establishments.

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.

For full details, refer to the official NYC Department of Consumer and Worker Protection page: NYC Paid Safe and Sick Leave Law – Including Prenatal Leave.

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.  

For more detailed information, you can visit the Alaska Department of Labor and Workforce Development’s FAQ page.  

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.