What’s Changing in 2026? HR & Benefits Compliance at a Glance

The HR and benefits landscape is changing faster than most business owners can keep up with, and 2026 looks like a year of big shifts. Federal regulators are rolling out new rules, and major states are stacking on their own. For small and mid-sized businesses, the message is clear: adapt early or risk falling behind.

Here’s what we’ll cover in this guide:

• The biggest federal HR and benefits compliance updates of 2026
• How California’s new mandates raise the bar for employers
• A quick tour of other states with significant changes this year
• Practical, step-by-step advice to keep your business on track
• Why working with a PEO partner makes navigating compliance much simpler

Let’s start where the most dramatic changes are happening: at the federal level.

Federal HR & Benefits Compliance Highlights for 2026

If you only remember one thing from this blog, let it be this: the big compliance story in 2026 isn’t state law, but the feds. Washington is cranking out rules and tax tweaks that will reshape how small and mid-sized businesses run HR and benefits. Here’s what you need to keep your eye on.

Workplace Accommodations & Protections

Pregnancy and nursing rights have leveled up. Under the Pregnant Workers Fairness Act, employers with 15+ employees now have to provide “reasonable accommodations” for pregnancy-related needs — think schedule changes, light duty, or extra breaks. Add in the PUMP Act, which requires nearly all employers to provide private, non-bathroom spaces and break time for nursing moms, and suddenly HR policies written in 2019 look ancient.

Religious accommodations are now subject to a higher standard of denial. Thanks to a Supreme Court decision in 2023, you can’t brush off requests unless you can prove a substantial hardship. Translation: schedule swaps and dress code tweaks are probably going to happen.

Takeaway: If your employee handbook hasn’t been updated in the last two years, you’re behind.

Classification & Contracts

Worker classification is once again under the microscope. The DOL is expected to tighten the definition of “independent contractor,” echoing strict tests already used in states like California. If you’ve got contractors running around who look, act, and work like employees, expect regulators to notice.

Meanwhile, non-competes are on the chopping block. The FTC has floated a nationwide ban, and while it’s still tangled in litigation, the writing is on the wall: restrictive covenants are dying. 

Even severance agreements are riskier. Thanks to recent NLRB rulings, you can’t stuff them with sweeping confidentiality or non-disparagement clauses anymore.

Checklist for 2026:

• Review contractor agreements.
• Reconsider blanket non-competes.
• Tighten severance language.

Miss this boat, and you’re the one paying for a misclassification audit.

Wages, Overtime & Safety

The federal minimum wage remains at $7.25, but that doesn’t mean other forms of compensation haven’t changed. The DOL is moving to raise the overtime salary threshold, likely landing north of $55,000 in 2026. That means some of your salaried managers may suddenly qualify for overtime. 

OSHA is also turning up the heat, so expect more inspections, more citations, and less patience.

Benefits & Tax Changes

Here’s where things get technical, but also where you can score major wins with employees:

• Dependent Care FSA cap jumps to $7,500 in 2026. This is the first increase in decades — parents will thank you.
  
  
• Telehealth stays HSA-friendly permanently. No more worrying about pre-deductible coverage blowing up HSA eligibility.
  
  
• Direct Primary Care (DPC) memberships are now compatible with HSAs; a big deal for employers pushing affordable healthcare.
  
  
• Student loan repayment aid (up to $5,250/year tax-free) is permanent. It’s indexed for inflation starting 2026.
• Retirement (SECURE 2.0): Automatic 401(k) enrollment is mandatory for new plans, Roth-only catch-ups for high earners, and long-term part-timers finally get in the game.
  
  
• No tax on tips: Effective for 2025 through 2028, employees and self-employed individuals in qualified occupations can deduct up to $25,000 in voluntary cash or charged tips.

Bottom line: Benefits compliance in 2026 is a moving target. Payroll systems and open enrollment communications need serious updates.

Federal Trends to Watch

Some issues aren’t locked in yet, but they’re worth flagging:

• Momentum for a national paid family leave program.
• Expanding OSHA rules, especially on heat exposure and workplace violence prevention.
• Federal rumblings about AI and workforce transparency. (Layoffs tied to automation may need special reporting.)

2026 is shaping up to be a federal compliance year. State rules still matter, but the feds are where small to medium-sized businesses (SMBs) need to keep their radar tuned.

California: What SMBs Should Know

California remains the gold medalist in regulatory complexity. If your business operates in the Golden State, brace yourself. Several new and updated laws are going live in 2026:

Wage Floors and Salary Thresholds

As of January 1, 2025, California’s minimum wage jumped to $16.50/hour statewide. It’s expected to tick up again in 2026 based on inflation. That means the salary threshold for exempt employees (2x minimum wage) will climb north of $68,000/year. If you’ve got salaried staff below that, it’s time to reclassify or raise pay.

Leave, Benefits & Workplace Conduct

• You can’t require employees to burn PTO before using state Paid Family Leave.
• “Kin care” rules expanded. Workers can now use sick leave to care for a wider range of relatives.
• Off-duty cannabis use is protected. You can’t fire or refuse to hire based on a positive test for non-psychoactive metabolites.

Pay Transparency & Reporting

Posting job ads in California? You must include pay ranges. Large employers must file annual pay data reports that include median and mean pay gaps.

Heads up: CalSavers is now mandatory for businesses with as few as 1–4 employees. Either offer your own plan or register with the state.

Other Notable State-Level Changes

While California deserves its spotlight, several other states are rolling out changes in 2026 worth a quick mention, especially if you’ve got multi-state operations.

New York

• Paid prenatal leave: 20 hours paid time off for pregnancy-related appointments.
  
  
• Raising thresholds: Minimum wage and exempt salary levels are climbing again.
  
  
• Safety & notices: New rules on lactation breaks, reproductive health notices, and workplace violence standards for certain sectors.

Rising State-Level Obligations — Quick Hits

Get ahead of the curve in states where compliance is shifting fast:

• Oregon: Starting January 1, 2026, employers must hand new hires a written breakdown of their pay and deductions, and update it every year. This goes deeper than typical pay-stub rules.
  
  
• Washington: Paid Family & Medical Leave (PFML) gets a major revamp. From January 1, 2026, employers with 25+ employees must restore employees to their job after PFML — even if they’ve only worked 180 days. Job restoration rights phase down to smaller employers through 2028.
  
  
• New PFML programs in Delaware, Maryland, Maine, and Minnesota: All are rolling out state-mandated Paid Family & Medical Leave plans next year. Employers in these states should start planning for contributions and benefits administration now.

Even if your business is based in one state, federal contractors, satellite offices, or seasonal/temp staff can trigger these obligations. If you’re a BBSI client, make sure you’re leaning on your team to keep you covered across multiple jurisdictions.

BBSI: Your Partner in Benefits Compliance

From federal benefit rules to state-specific mandates, the compliance shifts coming in 2026 will affect payroll, policies, and benefits for nearly every SMB. 

Make sure you’re getting the most out of your BBSI partnership. From federal benefit rules to state-specific mandates, your local team has the tools and expertise to help you stay ahead, reduce risk, and keep operations running smoothly. 

If you have questions about how these 2026 changes affect your business, connect with your BBSI representative for tailored guidance.