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:
Let’s start where the most dramatic changes are happening: at the federal level.
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.
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.
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:
Miss this boat, and you’re the one paying for a misclassification audit.
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.
Here’s where things get technical, but also where you can score major wins with employees:
Bottom line: Benefits compliance in 2026 is a moving target. Payroll systems and open enrollment communications need serious updates.
Some issues aren’t locked in yet, but they’re worth flagging:
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 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:
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.
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.
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.
Get ahead of the curve in states where compliance is shifting fast:
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.
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.