California – In 2025, there are several new laws and expansion of existing laws going into effect, including but are not limited to:

• California State & Local Minimum Wage Increase
• California Worker Freedom from Employer Intimidation Act
• Expanded leave for victims of violence
• Driver’s license requirements in job postings
• Expanded access to Paid Sick Leave
• Workers’ compensation notice to employees
• Whistleblower posting
• For more information, download the California Legislative Update here.

Colorado – In 2025, there are several new laws and expansion of existing laws going into effect, including but not limited to:

• Protections for Delivery-Network drivers
• Changes to non-compete laws
• Changes in AI, privacy and health benefits coverage
• Small employer health insurance designation
• Stay tuned for additional information on Colorado legislative updates

Illinois – In 2025, there are several new laws and expansion of existing laws going into effect, including but not limited to:

• Increased minimum wage
• Pay transparency
• AI restrictions
• Pay stub requirements
• Illinois Personnel Record Review Act
• Illinois Worker Freedom of Speech Act
• Right to Privacy in the Workplace Act
• Secure Choice Savings Program
• For more information, download the Illinois Legislative Update here.

Minnesota – In 2025, there are several new laws and expansion of existing laws going into effect, including but not limited to:

• Expansion of Minnesota paid family leave act
• Pregnancy and parental leave enhancement
• Earned Sick and Safe Time Law
• For more information, download the Minnesota Legislative Update here.

New York – In 2025, there are several new laws and expansion of existing laws going into effect, including but not limited to:

• New York state & local minimum wage increase
• Paid prenatal leave and lactation breaks
• Increase to overtime exemption salary threshold in certain counties
• For more information, download the New York Legislative Update here.

Oregon – In 2025, there are several new laws going into effect, including Oregon minimum wage increases and warehouse employee protections. For more information, download the Oregon Legislative Update here.

Washington – In 2025, there are several new laws and expansion of existing laws going into effect, including but not limited to:

• Washington State Minimum Wage
• Expansion of Paid Sick Leave
• Equal Pay and Opportunities Act
• Employee Free Choice Act
• For more information, download the Washington Legislative Update here.

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. Click here to learn more about 2025 Disability Chart for Employer and Employee Contributions.

FUTA Reduction Credit
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 are two states that have not fully paid back their federal loan and will lose the full FUTA tax credit: California and New York. If you have employees in California or New York, you could be charged an additional 0.9% on employees’ wages, which comes to approximately $63.00/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. 11. Billing for the extra $63.00/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.

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

Additionally, several federal agencies have issued positions regarding non-compete provisions in employment agreements. In April 2024, the Federal Trade Commission (FTC) issued a new rule banning nearly all non-compete clauses nationwide. The ban was supposed to go into effect in September 2024. However, a court ruled that the ban could not go into effect. The FTC has challenged this ruling on appeal. In late 2024, General counsel for the NLRB issued a memorandum to her staff outlining her plan to penalize employers for illegal non-compete agreements. NLRB General Counsel has determined that it is unlawful for employers to maintain non-compete agreements with non-supervisory employees, except in narrow circumstances involving employees with proprietary information. The full memorandum can be found here: NLRB Memo. The General Counsel’s memorandum is part of the NLRB’s larger position regarding agreements with employees. The NLRB has determined it is unlawful for employers to enter into confidentiality or non-disclosure agreements in certain situations for NLRA-covered employers. The NLRB has also found it unlawful for employers to prohibit non-supervisory employees from discussing their terms of employment with third parties.

In light of recent agency actions, employers 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, Nevada, New York, 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 2025:

• Illinois: Effective January 1, 2025, amendments to the Illinois Equal Pay Act will require that employers with 15 or more employees disclose “pay scale and benefits” in all job postings. An employer must make and keep records of the pay scale and benefits for each position, as well as the job posting for each position. Records must be kept for a minimum period of five years.
• Massachusetts: Effective October 29, 2025, employers with 25 or more employees will be required to disclose pay ranges. Additionally, employers with one hundred or more employees and subject to EEO-1 reporting obligations will be required to report aggregated wage data as a supplement to the EEO-1 report to the state. First report must be submitted by February 1, 2025.
• Minnesota: Effective January 1, 2025, employers with 30 or more total employees in Minnesota will be subject to Minnesota’s new pay transparency requirements.  Covered employers will be required to include in all job postings a starting salary range, or if no range, a fixed pay rate.
• Vermont: Effective July 1, 2025, employers of 5 or more employees must ensure that any advertisement for a Vermont job opening includes the compensation or range of compensation for the job opening.

Minimum Wage

Minimum wage is increasing for most states in 2025. Employees that are working in those states will automatically be updated with the new state minimum wage effective on January 1, 2025. 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 2025 year. Employees that work in these cities/counties will automatically be updated with the new locality minimum wage effective on January 1, 2025. To see which locality has an increase in minimum wage refer here.

Family & Medical Paid Leave Insurance

Every year, more states add Family & Medical Paid Leave Insurance benefits. As of 2025, 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, 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.

• Delaware – Starting January 1, 2025, Delaware has been newly included in the list of states implementing a PFML tax requirement. 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 (click here to view table). Employers and employees pay a family-leave insurance contribution on wages up to the federal Social Security cap ($176,100) for 2025. PFML resources for Delaware: Employer Page | FAQs
• Maine – Starting January 1, 2025, Maine has been newly included in the list of states implementing a PFML tax requirement. In January, all employers will be required to register in the Paid Leave Portal. If you have a payroll provider, you can designate them during the registration process. 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 ($176,100) for 2025. Rates access are by employee count (click here to view table). 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. The FAMLI Division expects the online web application to open by the Spring of 2025. Beginning on July 1, 2025, 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 on October 1, 2025. Employers will need to register with the State through an online web application. The wage base is capped up to the Federal Social Security cap ($176,100) for 2025. Rates access are by employee count (click here to view table). PFML resources for Maryland: Employer Page | Employer FAQs | Claims FAQs | Employee Page
• Massachusetts –Effective January 1, 2025, Massachusetts premium rate will stay the same 0.88%, up to the Social Security cap ($176,100) for 2025. The contribution is divided into a medical leave contribution, which is 0.7% for 2025, and a family leave contribution, which is 0.18% for 2025. 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 2025.
• Minnesota – Enacted Paid Leave contribution will start in 2026. Premium rates have not yet been set. Employers will contribute a minimum of 50% of the total premium, but can choose to pay up to 100%. More to come as information is available. Keep up to date by visiting the Employer Page.
• Oregon – Beginning January 1, 2025, the premium rate stays the same 1% of wages, up to the Social Security cap ($176,100) for 2025. 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, 2025, Washington premium rate is increasing from 0.74% to 0.92%, up to the Social Security cap ($176,100) for 2025. For employers with at least 50 employees, the new arrangement mandates that they contribute 28.48% of the premium rate, with employees responsible for the remaining 71.52%. 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. 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), 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 2025:

• Alaska: In the most recent election, a majority of Alaska voters appeared to have voted in favor of creating a new statewide paid sick leave law that would go into effect on July 1, 2025.
• California: Effective January 1, 2025, California will expand sick leave protections. California passed AB-2499 which expanded safe time uses of paid sick time, extended the types of crimes covered by sick leave and added leave for employees with a family member who is a victim of a crime. California also pased SB 1105, which allows agricultural workers to use sick time in case of smoke, heat or flooding conditions caused by local or state emergency. More information on California sick leave can be found here: https://www.dir.ca.gov/dlse/paid_sick_leave.htm.
• Connecticut: Effective January 1, 2025, Connecticut will expand the number of employers covered by its paid sick leave law and increase the number of hours employees can earn. Starting January 1, 2025, employers with 25 employees must provide their employees with paid sick leave. Under the new law, employees will accrue one hour of paid sick leave for every 30 hours worked, up to a maximum of 40 hours per year. Employers may grant more time off or allow accrual at a faster rate. More information on Connecticut’s sick leave law can be found here: https://portal.ct.gov/governor/news/press-releases/2024/05-2024/governor-lamont-signs-legislation-expanding-paid-sick-days-laws?language=en_US.
• Chicago, Illinois: Beginning in July 1, 2024, the Chicago Paid Leave and Paid Sick and Safe Leave Ordinance entitled eligible employees to accrue up to 40 hours of paid leave and up to 40 hours of paid sick leave in a 12-month period and carryover certain leave into the next year. Eligible employees will begin to accrue 1 hour of paid leave and 1 hour of paid sick leave for every 35 hours worked after July 1, 2024, or their first day of employment, whichever is later. Employees may carry over up to 80 hours of paid sick leave and up to 16 hours of paid leave from one 12-month accrual period to the next. In the alternative, employers may frontload either or both paid leave and/or paid sick leave by giving the employee the full 40-hour paid leave or paid sick leave benefit upfront. New pay out leave requirements for medium employers and new enforcement remedies, including ability to initiate litigation, go into effect on July 1, 2025. More information on Chicago’s paid sick leave can be found here: https://www.chicago.gov/content/dam/city/depts/bacp/OSL/PLPS%20One%20Pager.pdf.
• Michigan: Effective February 21, 2025, all Michigan employers must comply with Earned Sick Time Act. The Earned Sick Time Act will entitle all employees to accrue one hour of earned sick time for every 30 hours worked. Accrual begins on February 21, 2025, or upon commencement of the employee's employment, whichever is later. Any unused earned sick time carries over from year to year. However, an employer is not required to permit an employee to use more than the annual allowed maximum time (paid or unpaid) in a 12-month period. Although not clear in the law, it appears the employer may provide the total amount of paid sick leave at the beginning of the benefit year, provided it complies with the accrual, use, carryover, and other provisions of the ESTA during the benefit period. More information on Michigan’s Earned Sick Time Act can be found here: https://www.michigan.gov/leo/bureaus-agencies/ber/wage-and-hour/paid-medical-leave-act.
• Minnesota: Effective January 1, 2025, all paid time off and other paid leave made available to an employee by an employer in excess of the minimum amount required for absences from work due to personal illness or injury (excluding short-term or long-term disability or other salary continuation benefits) must meet or exceed the law’s minimum standards and requirements. An employee earns one hour of sick and safe time for every 30 hours worked and can earn a maximum of 48 hours each year unless the employer agrees to a higher amount. More information on sick leave can be found here: https://www.dli.mn.gov/sick-leave.
• Missouri: In the most recent election, a majority of Missouri voters appeared to have voted in favor of creating a new statewide paid sick and safe time law that would go into effect on May 1, 2025.
• Nebraska: In the most recent election, a majority of Nebraska voters appear to have voted in favor of creating a new statewide paid sick leave law that would go into effect on October 1, 2025.
• New York: In addition to sick and safe leave, employers must provide paid prenatal leave. Effective January 1, 2025, employers must provide qualifying employees with up to 20 hours of paid prenatal leave per 52-week period. The state's budget for fiscal year 2025 also includes new requirements for employers to provide paid lactation breaks. More information on New York paid leave can be found here: https://paidfamilyleave.ny.gov/.
• Washington: Effective January 1, 2025, there are several expansions to the Washington. The expanded law will allow the use of sick leave when there is a closure as the result of the declaration of an emergency by a local or state government or agency, or by the federal government. The expanded law also revises the definition of family member to “any individual who regularly resides in the employee’s home or where the relationship creates an expectation that the employee care for the person, and that individual depends on the employee for care.” More information on Washington’s paid sick leave can be found here: https://www.lni.wa.gov/workers-rights/leave/paid-sick-leave/.

As your HR partner, we're delighted to offer you a complimentary Digital Labor Law poster (PDF) 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.