For state-specific changes, please visit https://www.proservice.com/multistate-updates/.

Five states and Puerto Rico have mandated State/Temporary Disability Insurance paid by the employer or employee. The Temporary Disability Insurance is part of a tax deduction and is paid with the Unemployment at the end of the quarter. You can learn more here: 2026 Disability Chart for Employer and Employee Contributions.

FUTA stands for the Federal Unemployment Tax Act, a federal law that imposes a tax on employers to fund unemployment benefits. The standard FUTA tax rate is 6.0% on the first $7,000 of each employee's wages. However, if a state has no outstanding federal loans for unemployment benefits, the FUTA tax rate is effectively 0.6% due to the FUTA tax credit (6.0% – 5.4% credit).

Currently, there is one state that has not fully paid back their federal loan and will lose the full FUTA tax credit: California. If you have employees in California, you could be charged an additional 1.2% on employees’ wages, which comes to approximately $84.00/employee.

Note: As a ProService client, you don't have to make any changes. We will reconcile the employees in each of those states once the final list comes out around the week of Nov. 10. Billing for the extra $84.00/employee will appear on your invoice in December. The extra amount will be reported and paid on your normal FUTA 940 return by January 31, 2026.

State salary thresholds for exempt status can vary significantly and are typically aligned with federal standards unless a state sets its own requirements. In 2026, several states will implement updated thresholds for administrative, professional, and executive exemptions. Washington will require exempt employees to earn 2.25 times the state minimum wage as of January 1, 2026, resulting in an annual threshold of about $80,038 based on a minimum wage of $17.13 per hour, with increases planned through 2028. Maine will set its 2026 exempt salary threshold at $45,300.32 per year, tied to a minimum wage of $15.10 per hour. California will require exempt employees to earn twice the state minimum wage, which will be $16.90 per hour in 2026, leading to a threshold of $70,304 annually. In New York, employees in New York City and in Nassau, Suffolk, and Westchester Counties must earn at least $1,275 per week, while those in other regions must earn at least $1,199.10 per week. For ProService clients, an HR consultant is available to help you navigate any changes to salary thresholds.

Outside of Hawaii, several states including California, Minnesota,, North Dakota, Oklahoma and Wyoming have banned non-compete agreements. Other states, such as Arkansas, Colorado, Illinois, Indiana, Maine, Maryland, Montana, Nebraska, New Hampshire, Oregon, Rhode Island, Virginia, and Washington, have prohibited non-compete covenants for certain categories of employees.

Employers should take inventory of all employment agreements. To ensure compliance, employers should take a closer look at non-compete or “stay to pay” provisions. Non-compete provisions should be supported by a legitimate business interest, which should be articulated in the policy. Employers should consider offering training regarding non-compete or “stay or pay” employment agreements. If you have any questions, please contact your ProService HR Consultant for support and tailored guidance.

In addition to Hawaii, California, Colorado, Connecticut, Illinois, Massachusetts, Maryland, Minnesota, Nevada, New York, Oregon, Rhode Island, Vermont, Washington and Washington D.C. have enacted pay transparency laws. Some cities including those in New York, New Jersey and Ohio have their own requirements. Here are new laws going into effect in 2026:

California: Effective January 1, 2026, employers will also need to include a description of all forms of pay on a job posting, including bonuses, stock options, benefits, travel reimbursements, and allowances. Employers will be required to provide a “good faith estimate” of the salary or hourly wage range they reasonably expect to pay upon hire, not the full range.

Minimum Wage

Minimum wage is increasing for most states in 2026. Employees that are working in those states will automatically be updated with the new state minimum wage effective on January 1, 2026. You can learn more about out-of-state minimum wage increases here.

Local Minimum Wage

There are states that have local minimum wage increases for the 2026 year. Employees that work in these cities/counties will automatically be updated with the new locality minimum wage effective on January 1, 2026. To see which locality has an increase in minimum wage refer here (pages 2–3).

Family & Medical Paid Leave Insurance

Every year, more states add Family & Medical Paid Leave Insurance benefits. As of 2026, 14 states and Washington D.C. have (or will have) state-required/voluntary paid leave for an employee's medical condition and/or paid family leave for bonding with a new child, caring for a seriously ill or injured family member, and certain other purposes. This includes California, Colorado, Connecticut, Delaware, Maine, Maryland (effective 2027), Massachusetts, Minnesota (effective 2026), New Hampshire (voluntary), New Jersey, New York, Oregon, Rhode Island, Virginia (voluntary), Washington, and Washington D.C. Despite some common elements, what is covered, who is eligible, and who contributes to the fund varies by state. Employee payroll deductions usually fund this benefit (except in Washington D.C. where employers fully fund it). In other states, Family & Medical Paid Leave Insurance is partially funded through employer payroll deductions based on employee headcount.

Colorado — Beginning January 1, 2026, the premium rate will be decreased from 0.9% to 0.88% of wages, up to the Social Security Cap ($184,500) for 2026. All employers are required to withhold the premium from their employees. Employers with 10 or more employees are required to pay 0.44% of the premium and the employee will be responsible to pay 0.44% of the premium. Employers with 9 or less employees, employers are exempted from the employer portion, but may opt in to pay the employer premium of 0.44%. PFML resources for Colorado: Employer Page | Employer Tool Kit | FAQs

Connecticut — Beginning January 1, 2026, the premium rate is not changing from 2025 which is 0.5% of wages, up to the Social Security Cap ($184,500) for 2026. All employers are required to withhold the premium from their employees. Employers do not pay any portion of the premium. The premium is paid by the employees. PFML resources for Connecticut: Employer Page | FAQs

Delaware — Beginning January 1, 2026, Delaware premium rate is not changing from 2025. Employers are responsible for 100% of the contributions under the plan, but the State allows the employer to require their employees to pay up to (but no more than) half of their contributions. The required coverages provided by each employer depends on their Employee Count that works in the state (see below). Employers and employees pay a family-leave insurance contribution on wages up to the federal Social Security cap ($184,500) for 2026. PFML resources for Delaware: Employer Page | FAQs

Maine — Beginning January 1, 2026, Maine premium rate is not changing from 2025. Employers with one or more employees working in the state between October 1, 2023 and September 30, 2024 are required to withhold the Paid Family Medical Leave tax. Employers are responsible for 100% of the contributions under the plan, but the employer may withhold up to 0.5% of your employees’ wages with advance notice. The wage base is capped up to the Federal Social Security cap ($184,500) for 2026. Rates access are by employee count (see below). PFML resources for Maine: Employer Page | What Employers need to know | FAQs

Maryland — As has pushed back their start date of Paid Family Medical Leave. Beginning on January 1, 2027, employers with one or more employees working in the state are required to withhold the Paid Family Medical Leave tax. Reporting these contributions will begin in April 2027. Employers will need to register with the State through the FMLI’s website in the Fall of 2026. The wage base is capped up to the Federal Social Security cap for 2027. Rates for employee and employer will be set by May 1, 2026. Employers with fewer than 15 employees worldwide do not have to pay the required employer share of the Paid Family Medical Leave contribution. Employers with more than 15 employees worldwide are required to pay the employer share of the Paid Family Medical Leave contribution. FMLI resources for Maryland: Employer Page | FAQs | Employee Page | Claims

Massachusetts — Beginning January 1, 2026, Massachusetts premium rate will stay the same 0.88%, up to the Social Security cap ($184,500) for 2026. The contribution is divided into a medical leave contribution, which is 0.7% for 2026, and a family leave contribution, which is 0.18% for 2026. All of the family leave contributions can be withheld from employees’ pay, while up to 40% of the medical leave contribution, or 0.28%, can be withheld. Employers must pay at least the other 60%, or 0.42%, of the medical leave contribution. Employers with fewer than 25 employees do not have to pay the required employer share of the medical leave contribution, so their contribution rate is 0.46% for 2026.

Minnesota — Effective January 1, 2026, Minnesota Paid Leave for employees that will need to care for child bonding, caring for a family member, managing military leaves, personal safety issues and caring for themselves that have a medical issue. Employers that have one or more employees working in the state are required to withhold Paid Leave tax. Employers will need to notify their employees by Dec. 1 regarding the new tax. Here is a template provided by the Minnesota Department of Paid Leave for you to customize for your employees. For registration of the new taxes, there is no action on your part if you already have an Unemployment account, as the state will convert your Unemployment account to accommodate the new reporting structure for Paid Leave. Reporting these contributions will begin in April 2026. Contribution rates for employers and employees are based on the size of their workforce. See chart below. Employers will contribute up to 44% of the total premium, but can choose to pay up to 100%. We will set all employers rates to 22% or 44%, unless otherwise notified. Paid Leave resources for Minnesota: Employer Page | Fact Sheet | Resource Toolkit | FAQs

Oregon — Beginning January 1, 2026, the premium rate stays the same 1% of wages, up to the Social Security cap ($184,500) for 2026. Employers pay 60% and the employees pay 40%. For employers with 24 or fewer employees, contributions are only paid by the employee. For employers with 25 or more employees working for them, contributions are paid by employer and employee.

Washington — Beginning January 1, 2026, Washington premium rate is increasing from 0.92% to 1.13%, up to the Social Security cap ($184,500) for 2026. For employers with at least 50 employees, the employer will contribute 28.57% of the premium rate, with employees responsible for the remaining 71.43%. Employers with fewer than 50 employees are relieved from the obligation of paying the employer portion of the premium. However, they are still required to withhold and remit the employee portion.

There is no federal legal requirement for paid sick leave. To fill this gap, several states and localities have enacted their own job-protected paid leave. Alaska, Arizona, California (Berkley, Emeryville, Long Beach, Los Angeles, Oakland, San Francisco, San Diego, Santa Monica and West Hollywood) Connecticut, District of Columbia, Illinois (Chicago and Cook County), Maine, Maryland (as well as Montgomery county), Massachusetts, Michigan, Minnesota (Bloomington, Duluth, Minneapolis, Saint Paul), Nebraska, Nevada, New Jersey, New Mexico (Bernalillo County), New York (New York City and Westchester county), Oregon, Pennsylvania (Allegheny County, Philadelphia and Pittsburgh), Rhode Island, Vermont, Virginia, and Washington (SeaTac, Seattle and Tacoma) are among the states and localities with paid sick leave laws.

There are several expansions of laws going into effect in 2026:

• New York City: New York City will enact a large set of amendments on February 22, 2026. These amendments expand the definitions of family members, add new covered reasons for leave such as workplace violence and public disasters, and introduce two new leave entitlements: thirty two hours of unpaid sick and safe leave each year and twenty hours of paid prenatal personal leave every fifty two week period. The rules for how employees may request and use leave will also change, including updated standards for minimum increments and shift makeup arrangements. In addition, the city will strengthen confidentiality protections related to medical and safe leave information and modify the conditions under which a collective bargaining agreement may waive the law. More information on these changes can be found here: https://www.ny.gov/programs/new-york-paid-sick-leave.
• Pittsburgh, Pennsylvania: Pittsburgh will also see changes beginning January 1, 2026. The maximum amount of paid sick time that employers with fifteen or more employees must allow will increase to seventy two hours, which is an increase from forty hours. Provisions that previously capped leave at twenty four hours for very small employers will be removed. The city will also implement updated posting and investigation notice requirements on the same date. More information on these changes can be found here: https://www.pittsburghpa.gov/City-Government/Legal-Services/Office-of-Equal-Protection/Paid-Sick-Days-Act.
• Nebraska: Nebraska’s Healthy and Safe Families and Workplaces Act contains provisions that apply when an employer’s workforce size changes in 2026. A business becomes a “large business” once it reaches at least 20 employees who have each worked 80 hours in Nebraska, a company crossing this threshold and becoming subject to large-business requirements beginning May 24, 2026. Conversely, if a business drops below 11 Nebraska-covered employees, it stops being considered an employer under the Act. If that business rehires and once again reaches 11 employees, it does not regain coverage until the new worker completes 80 hours of consecutive employment. More information can be found here: https://dol.nebraska.gov/LaborStandards/PaidSickTime/PSTFAQs.

As your HR partner, we're delighted to offer you a complimentary poster which will be available by January 31 to share with your out-of-state employees. Please expect an email from us in mid-January letting you know when they are available.

For a workforce with only remote employees, providing a digital labor law poster will likely satisfy the compliance requirement in lieu of a physical poster if employees customarily receive information via electronic means and employees readily have available access to the electronic posting. If employees work exclusively on site, employers should display the poster in a physical workplace. If an employer has a hybrid of on-site and remote workers, employers should display a physical poster and post the poster electronically.