Payroll & HR Rules: Federal Law and How State Rules Work

In what order should I set up payroll accounts before my first hire?

FederalVaries by state

Short answer: Form your LLC or corporation with the state first, get a free federal EIN, then open your state withholding and unemployment accounts, line up workers' comp if your state requires it at your size, collect the new hire's paperwork, report the hire to the state within 20 days (sooner in some states) and put up your posters.

A practical order for most employers:

1. Form the entity with your Secretary of State (or equivalent), if you are an LLC or corporation. The IRS says corporations and LLCs that apply for an EIN before the state filing may see delays (IRS: Get an EIN).
2. Get an EIN from the IRS (free, online).
3. Register for state income tax withholding with your state revenue agency. Nine states have no wage income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming), so there is no withholding account there.
4. Register for state unemployment insurance with your state workforce agency.
5. Arrange workers' compensation coverage if your state requires it at your headcount (from 1 to 5 employees depending on the state; see the workers' comp chapter).
6. Collect new-hire forms on day one: Form I-9, federal Form W-4 and your state's withholding form if it has one. Run E-Verify where required.
7. Report the new hire to the state new hire directory within 20 days, or sooner if your state sets a shorter deadline.
8. Give any required wage notice and hang the posters required federally and by your state.

Many states run a "one stop" business registration portal that covers withholding and unemployment together; others keep them separate. Look up your state:

Do I need an EIN before I hire, and how do I get one?

Federal

Short answer: Yes. You need an EIN before you run payroll because it goes on every federal employment tax return and W-2. It is free from the IRS and, if approved, issued immediately online.

Key points from the IRS: Get an EIN page (reviewed Oct 16, 2026):

• Cost: none. The IRS never charges for an EIN and warns about sites that do.
• Who applies: the business's responsible party (or an authorized representative), using that person's SSN or ITIN. A third-party designee needs signed authorization.
• Limit: one EIN per responsible party per day.
• The online session can't be saved and times out after 15 minutes of inactivity, so have your information ready.
• Paper options: Form SS-4 by phone, fax or mail is for applicants who can't use the online tool, such as a business whose principal place of business is outside the US. Fax and mail processing times were not shown on the IRS page.

Online hours (Eastern time):

Keep the EIN with your employment tax records (IRS: Employment tax recordkeeping).

How do I form my business with the state before hiring?

Varies by state

Short answer: File formation documents with your state's business filing office (usually the Secretary of State). Filing fees, annual report fees and any franchise tax vary by state, so check your state's current fee schedule before you file.

• What you file: articles of organization (LLC) or articles of incorporation (corporation). A business that operates under a name other than its legal name usually registers an assumed name (DBA), with the state or the county depending on the state.
• What it costs: our state guides list each state's LLC and corporation fees, annual report rules and franchise or privilege taxes, with the date each fee was checked.
• Keeping it in good standing: most states require an annual or biennial report; some also charge a franchise or privilege tax.
• Scam mailers: several states have warned about third parties that mail official-looking "annual report" or "certificate" offers for a fee. File only through the state's own site.

Look up your state:

How do I register for state withholding tax?

Varies by state

Short answer: In the 41 states and DC that tax wages, register with the state revenue agency for a withholding account before your first payroll, usually free and online. Nine states have no wage income tax, so there is nothing to register there for withholding.

• No wage income tax (2026): Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming (Tax Foundation: State individual income tax rates and brackets, 2026, published Feb 17, 2026). Washington taxes only capital gains, and New Hampshire repealed its interest and dividends tax in 2025.
• Register in this order: federal EIN; state withholding account with the revenue department (skip in no-wage-tax states); unemployment insurance account with the workforce agency; any state disability or paid-leave program and local taxes that apply; workers' comp coverage; then new-hire reports. A few states combine registrations (Oregon, for example, uses one combined employer filing).
• What you'll need: your EIN, your state business registration number if you have one, legal name and address, responsible person details, the date wages start and your business type.
• Timing: many states issue an account number on screen; others mail it within days or weeks. Register as soon as you know you'll hire.
• Your state's employee form: most income-tax states have their own withholding certificate (a "state W-4"); some accept the federal W-4.
• Working in one state, living in another: reciprocity agreements between some neighboring states change which state you withhold for. Check with both revenue agencies.

Look up your state:

You can also find every state revenue agency on the IRS: State government websites page.

How are state withholding rates set, and how often do I file?

Varies by state

Short answer: Each state sets its own rates and tables, and usually assigns you a filing frequency (quarterly, monthly or more often) based on how much you withhold. Most states require an annual reconciliation with copies of W-2s, often due January 31.

• Flat or graduated: for 2026, 15 states use a single flat rate (Arizona, Colorado, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Mississippi, North Carolina, Ohio, Pennsylvania and Utah; Ohio's 2.75% is new for 2026); the rest that tax wages use graduated brackets, with top rates from 2.5% (Arizona, North Dakota) to 13.3% (California) (Tax Foundation: State individual income tax rates and brackets, 2026).
• Rates change, sometimes mid-year: several states cut rates for 2026. In at least one case (South Carolina's Act 110, signed March 30, 2026) the legislature changed 2026 rates after the state had already published its 2026 withholding tables, so employers had to watch for revised tables. Check your state's withholding page each January and after legislative sessions.
• Filing frequency: typically larger withholders file and pay more often (monthly or semiweekly); small ones may file quarterly or annually. Some states follow your federal deposit schedule.
• Year-end: most states want an annual reconciliation plus W-2 copies (and 1099s showing state tax withheld), commonly by January 31 and often electronically.
• Penalties: states charge late-filing and late-payment penalties and interest, and many hold responsible officers personally liable for withheld tax not paid over.

Look up your state's withholding instructions through your revenue agency:

Do I have to register for state unemployment insurance before hiring?

Varies by state

Short answer: Yes, once you meet your state's liability test, which almost any business with a regular employee meets in its first year. Register online with your state workforce or labor agency.

• The usual test: paying $1,500 or more in wages in a calendar quarter, or having at least one employee in 20 different weeks of a year. This mirrors the federal FUTA test, and most states use it Check each state's exact liability test on its workforce agency site..
• What you get: an employer account number, a tax rate notice and quarterly reporting duties.
• Being FUTA-liable usually makes you liable for state UI too.

Rates and wage bases are in the unemployment insurance chapter. Look up your state's UI registration:

How do I report a new hire to the state?

FederalVaries by state

Short answer: Report every new or rehired employee to your state's new hire directory within 20 days of hire, or sooner if your state sets a shorter deadline. Most states take reports online, by file upload or by mail, and your payroll provider may file them for you.

• Federal floor: private employers report to the state; the 20-day maximum comes from 42 U.S.C. 653a, and states may set shorter deadlines.
• Shorter state deadlines (examples): 7 days in Alabama and Maine; 10 days in Georgia and Vermont; 14 days in Massachusetts, Rhode Island and South Carolina; 15 days in Iowa and Mississippi.
• What's reported (federal data elements): employer name, address and FEIN; employee name, address, SSN and date of hire (ACF: New hire reporting for employers). States may ask for more, such as your state UI number or the employee's date of birth.
• Rehires: many states treat someone returning after a set break (often 60 days) as a new hire.
• Contractors: about a dozen states also require reporting independent contractors, often above a dollar amount: for example California, Iowa and Massachusetts (over $600), Connecticut (contracts over $5,000), Maine and New Hampshire (over $2,500), West Virginia ($2,500 or more), plus Minnesota, Mississippi, Nebraska, New Jersey and Ohio.
• Penalties: set by each state; often small per-report fines that rise for conspiracy or repeat violations.

Look up your state's deadline, contractor rules and reporting site: ACF: State new hire reporting contacts and program requirements.

What is the federal new hire reporting rule?

Federal

Short answer: Federal law requires reporting new and rehired workers within 20 days of hire, or sooner if your state sets a shorter window. Private employers report to their state directory, which feeds the National Directory of New Hires for child support enforcement.

• Multistate employers may report all new hires to one state where they have employees. They must register with HHS, report electronically, and send reports at most twice a month, 12 to 16 days apart (ACF: New hire reporting for employers).
• Data elements: employer name, address and FEIN; employee name, address, SSN and date of hire.
• Source: HHS ACF OCSS: New Hire Reporting. Federal penalty amounts under 42 U.S.C. 653a weren't confirmed.

What federal tax forms does a new employee fill out?

Federal

Short answer: Every new employee completes the 2026 Form W-4. You use it with IRS Pub. 15-T to figure federal withholding, and keep it with your employment tax records.

• Use the 2026 W-4 and the withholding tables in Pub. 15-T (IRS Pub. 15 (2026); IRS Form W-4).
• 2026 changes reported by the payroll trade association (PayrollOrg, Dec 11, 2025): a 15-line Step 4(b) Deductions Worksheet on its own page, with lines to estimate qualified tips and qualified overtime; a checkbox to claim exemption instead of writing "Exempt"; the Step 3 child credit raised to $2,200 per child; the form is now 5 pages.
• Don't cut an employee's withholding on your own because you expect them to claim the overtime deduction. Withholding changes only if they turn in a new W-4 using Step 4(b) (IRS FS-2026-13).
• Most states with an income tax also have their own withholding certificate; see state withholding.

When are federal payroll taxes deposited and filed?

Federal

Short answer: File Form 941 quarterly (April 30, July 31, October 31, January 31), Form 940 for FUTA by January 31, and W-2s to employees and SSA by January 31. Deposits are made electronically on a monthly or semiweekly schedule set by your lookback period.

2026 federal rates (IRS Pub. 15 (2026)):

Deposit schedule (IRS Topic 757):

• The lookback period is the 12 months starting July 1 of the second preceding year. $50,000 or less of tax in it makes you a monthly depositor (due the 15th of the next month); more than $50,000 makes you semiweekly.
• $100,000 or more accumulated on any day must be deposited the next business day, and you become a semiweekly depositor for the rest of that year and the next.
• A quarterly liability under $2,500 can be paid with a timely filed Form 941, as long as the next-day rule wasn't triggered.
• A brand-new employer is generally a monthly depositor in its first year because its lookback liability is zero.

Due dates (IRS: Employment tax due dates):

• Form 941: April 30, July 31, October 31, January 31. You get 10 extra days if all deposits were on time. For Q4 2026, January 31, 2027 is a Sunday, so the weekend rule points to Monday, February 1, 2027, but the IRS tax-year-2026 Form 94x due-date table prints February 2, 2027.
• Form 940: January 31 (February 10 if all FUTA was deposited on time). Deposit FUTA once the accumulated amount is over $500.
• W-2s (with W-3 to SSA): January 31.

Does every new employee have to fill out Form I-9?

Federal

Short answer: Yes, every new hire, US citizens included. The employee completes Section 1 by the first day of paid work, and you complete Section 2 within three business days after they start work for pay.

• Section 1: the employee, no later than the first day of work for pay.
• Section 2: the employer, no later than the 3rd business day after the employee starts work for pay. You examine the documents and confirm they reasonably appear genuine and relate to the person.
• Don't send it anywhere. You keep the I-9; it never goes to USCIS or ICE.

Source: USCIS: Complete and Correct Form I-9.

Which edition of Form I-9 should I use?

Federal

Short answer: Use the current USCIS edition, which shows an expiration date of 05/31/2027. USCIS extended the form's expiration to that date.

• USCIS updated Form I-9 to extend the expiration date to 05/31/2027 (USCIS: Form I-9 Related News).
• The newest edition is reported as dated 01/20/25 (released April 2025), and electronic I-9 systems had to show the new expiration date by July 31, 2026 (Beancount blog, Aug 16, 2026). That source isn't official.
• If you use payroll or HR software for electronic I-9s, confirm with your vendor that it displays the 05/31/2027 expiration.

How long do I keep I-9 forms?

Federal

Short answer: Keep each I-9 while the person works for you. After they leave, keep it until the later of 3 years after the hire date or 1 year after their last day.

Example: someone hired January 2024 who leaves March 2025 — 3 years from hire is January 2027; 1 year after leaving is March 2026. Keep it until January 2027.

Source: USCIS M-274 §10.0 Retaining Form I-9.

Can I check I-9 documents remotely over video?

Federal

Short answer: Only if you are an E-Verify employer in good standing. Everyone else must examine the original documents in person.

"Good standing" means you are enrolled in E-Verify for every hiring site that uses the procedure, you use E-Verify for new US hires, and you meet all program rules (USCIS: Remote Examination of Documents).

The steps:

1. The employee sends you copies of their documents (front and back if two-sided).
2. You review the copies and decide whether they reasonably appear genuine and relate to the employee.
3. You hold a live video call where the employee shows you the same documents.
4. You keep clear copies of the documents.

Rules:

• Check the "alternative procedure" box in Section 2 (Additional Information), or in Supplement B for rehires and reverifications.
• Keep the copies as long as you keep the I-9 and produce them in a federal inspection.
• If a hiring site offers the procedure, offer it to everyone at that site. You may limit it to remote hires, but not for discriminatory reasons.

For a small employer hiring remote workers, this is a practical reason to enroll in E-Verify even if no state mandate applies.

What is E-Verify, and is it required federally?

Federal

Short answer: E-Verify is a free federal online system that checks I-9 information against government records. Federal law makes it voluntary for most private employers, but federal contracts and some state laws can require it.

• It is free (E-Verify: What is E-Verify).
• To enroll (E-Verify: Enrolling in E-Verify): go to the enrollment site, choose an access method, sign the Memorandum of Understanding (MOU), enter company information and print the signed MOU.
• Commonly cited rules: cases must be created by the 3rd business day after the employee starts work, and E-Verify can't be used to pre-screen job applicants.
• Federal contractors: the FAR E-Verify clause (FAR 52.222-54) generally applies to prime contracts above the simplified acquisition threshold with a performance period of 120 days or more, flows down to certain subcontracts, and requires enrollment within 30 days of award.
• E-Verify participation poster and help: DHS/USCIS, 1-888-464-4218.

Does my state require E-Verify?

Varies by state

Short answer: Most states don't require it of private employers, but a minority do, either for every employer or once you reach a headcount. Where it's required, you usually must run each new hire within three business days and keep the records.

State mandates for private employers (as of 2026):

Check each state's current statute; these thresholds come from payroll and law-firm summaries.

• Indiana is not on this list. Its 2026 law (Senate Enrolled Act 76, effective July 1, 2026) bars knowingly hiring or keeping unauthorized workers at employers with 1 or more Indiana employees; using E-Verify is a safe harbor, not a requirement (Faegre Drinker, June 17, 2026).
• Penalties range from fines to suspension of state business licenses. Some states treat every employer as holding a state "employment license" that can be suspended.
• Counting employees: some laws exclude short-term or seasonal workers from the headcount.
• State contractors: many more states require E-Verify only for businesses that contract with the state or local governments.
• Using E-Verify in good faith usually creates a presumption of compliance.

Look up your state's rule through the E-Verify site and your state labor department.

How does the IRS decide if a worker is an employee or a contractor?

Federal

Short answer: The IRS uses the common-law test, which looks at behavioral control, financial control and the type of relationship. No single factor decides it; you look at the whole picture.

From IRS: Independent contractor or employee:

Calling someone a contractor in a written agreement doesn't settle it. States also use their own tests for unemployment, workers' comp and wage laws, and some (an "ABC test") are stricter than the IRS test; see state classification tests.

What does the Department of Labor test look like right now?

Federal

Short answer: For minimum wage and overtime, the DOL uses an "economic reality" test. Its 2024 six-factor rule is still on the books but not enforced, and a February 2026 proposal would replace it with a test built on two core factors. No final rule was confirmed as of October 2026.

• 2024 rule (six-factor, totality of the circumstances): published Jan 10, 2024, effective Mar 11, 2024 (DOL WHD: Misclassification rulemaking).
• Enforcement pause: in May 2025, Field Assistance Bulletin 2025-1 told investigators to stop applying the 2024 rule and use prior guidance (the 2008 fact sheet and 2019 opinion-letter approach) (DLA Piper; DOL WHD FABs).
• February 2026 proposal: announced Feb 26 and published at 91 FR 9932 (Feb 27, 2026), covering the FLSA, FMLA and MSPA. Comments closed Apr 28, 2026 (docket WHD-2026-0001).
• What the proposal says: two core factors — control over the work, and the worker's opportunity for profit or loss — plus other factors: skill, permanence, and whether the work is part of an integrated unit (SBA Office of Advocacy, Mar 3, 2026).
• Status: still a proposal in the latest sources found.

A worker suing under the FLSA isn't bound by DOL enforcement policy; courts apply their own circuit's economic-reality precedent.

Do states use a different test for contractors?

Varies by state

Short answer: Often, yes. States apply their own tests for unemployment insurance, workers' comp and state wage laws, and some use a strict "ABC test" that presumes a worker is an employee unless the business proves all three parts. A worker can be a contractor for IRS purposes and an employee under state law.

• ABC test (typical form): the worker is free from your control, the work is outside the usual course of your business, and the worker is customarily engaged in an independent business of the same kind. California is the best-known example for wage law; many states use some version for unemployment insurance Check which states use the ABC test and for which laws..
• Paying on a 1099 doesn't exempt you from state workers' comp or unemployment coverage in most states.
• New contractor-benefit laws: a few states are creating voluntary portable-benefit programs for independent contractors (North Carolina's takes effect January 1, 2027 under S.L. 2026-59), which say contributions don't by themselves make the contractor an employee (NCGA 2026 Labor & Employment Summaries).

Look up your state's tests through its workforce agency and labor department (DOL WHD: State labor offices). With several gray-area workers, ask an employment attorney.

What happens if I misclassify an employee as a contractor?

Federal

Short answer: You can owe the employment taxes you should have withheld and paid, plus penalties, and back wages for unpaid minimum wage or overtime. The IRS offers relief programs if you had a reasonable basis or fix it voluntarily.

From IRS: Independent contractor or employee:

• IRC §3509: an employer that misclassifies without a reasonable basis may owe employment taxes for that worker. The reduced rates commonly cited (1.5% of wages plus 20% of the employee FICA share, doubled if 1099s weren't filed) weren't confirmed on an IRS page.
• Section 530 relief: possible relief from employment taxes if you had a reasonable basis, filed all required 1099s consistently, and never treated similar workers as employees. It doesn't turn the worker into a contractor. See Pub. 1976.
• Voluntary Classification Settlement Program (VCSP): reclassify workers going forward with partial relief by applying on Form 8952.
• Form SS-8: you or the worker can ask the IRS to decide. Expect at least 6 months.
• The worker's side: a misclassified worker can file Form 8919 to pay only the employee share of FICA.

States add their own back taxes and penalties for unemployment and workers' comp. If you have several workers in a gray area, this is a good time for a CPA or employment attorney.

When do I have to send a contractor a Form 1099-NEC?

FederalVaries by state

Short answer: For payments made in 2026, send a 1099-NEC to a contractor you paid $2,000 or more (up from $600). It's due January 31, and you must e-file if you have 10 or more information returns in total.

From the IRS 1099-MISC and 1099-NEC Instructions and IRS Pub. 15 (2026):

• The $2,000 threshold applies to payments after 2025 and may be adjusted for inflation starting in 2027. The backup withholding threshold follows it.
• The W-2 threshold for wages with no withholding also rises to $2,000.
• New 1099 boxes: cash tips (1099-NEC box 1b, 1099-MISC 13a), tipped occupation codes (1099-NEC box 1c, 1099-MISC 13b), qualified overtime (1099-NEC 1d, 1099-MISC 14).
• E-filing is required at 10 or more returns in aggregate (T.D. 9972).
• For 2026 payments, January 31, 2027 is a Sunday, so the 1099-NEC is expected to be due Monday, February 1, 2027.

State copies: many income-tax states want copies of 1099s, either all of them or only those showing state tax withheld, often through the Combined Federal/State Filing Program or the state's own upload. Some states require withholding on payments to nonresident contractors. Check your state revenue agency (IRS: State government websites).

What is the minimum wage in my state?

FederalVaries by state

Short answer: The federal minimum is $7.25 an hour. When your state or city sets a higher rate, you pay the higher one. For 2026, 30 states and DC are above $7.25 and 20 states use $7.25; the highest state rate is Washington's $17.13.

• Federal: $7.25 an hour, in effect since July 24, 2009. When state and federal rules both apply, you follow both (DOL WHD: Minimum wage).
• States (DOL state table, updated July 1, 2026): 30 states plus DC above $7.25; the federal $7.25 is the effective floor in 20 states. Washington's $17.13 is the top state rate; DC's rate is $18.40 from July 1, 2026 (tipped base $10.30), per DC DOES (DOL WHD: State minimum wage laws). Nineteen states raised rates on January 1, 2026 (NELP: Raises from Coast to Coast in 2026).
• The 20 states at $7.25: 12 set a state rate of $7.25 (Idaho, Indiana, Iowa, Kansas, Kentucky, New Hampshire, North Carolina, North Dakota, Pennsylvania, Texas, Utah, Wisconsin); 5 have no state minimum wage law (Alabama, Louisiana, Mississippi, South Carolina, Tennessee); Georgia and Wyoming list $5.15, which the federal $7.25 overrides for employers the FLSA covers; Oklahoma is $7.25 for most employers.
• Already announced for 2027: California $17.40 on January 1, 2027 (CA DIR); Michigan $15.00 on January 1, 2027 (DOL state table); Alaska $15.00 on July 1, 2027, after $14.00 on July 1, 2026 (Alaska DOLWD); Washington $17.73 on January 1, 2027. Florida reached $15.00 on September 30, 2026. Inflation-indexed states (for example Arizona, Colorado, Connecticut, Maine, Minnesota, New Jersey, New York, Ohio, South Dakota, Vermont) usually announce 2027 rates in the fall Check each state's 2027 rate before listing it..
• Cities and counties: dozens of localities, mostly in California, Washington, Colorado, Illinois, Maryland, Minnesota, New Mexico, New York and Arizona, set their own higher minimums, while roughly half the states bar local minimum wages (UC Berkeley Labor Center inventory; EPI Minimum Wage Tracker).
• January raises: many state rates rise every January 1 with inflation, so check each December.

Look up your state: DOL WHD: State minimum wage laws.

What can I pay tipped employees?

FederalVaries by state

Short answer: Under federal law, as little as $2.13 an hour in cash wages, as long as tips bring the employee to at least $7.25 and you give advance notice. Many states set a higher cash wage, and several allow no tip credit at all.

Federal (DOL WHD Fact Sheet #15):

• A tipped employee customarily and regularly receives more than $30 a month in tips.
• Minimum cash wage $2.13; maximum tip credit $5.12.
• Tell employees (orally or in writing) before taking the tip credit.
• Tip pools can include only employees who customarily receive tips. If tips fall short, you make up the difference.

States (DOL tipped table, effective July 1, 2026): the cash wage runs from the federal $2.13 up to $17.13.

• No tip credit (7 states): Alaska ($14.00), California ($16.90), Minnesota ($11.41), Montana ($10.85; $4.00 for small businesses the FLSA doesn't cover), Nevada ($12.00), Oregon ($15.55 standard, $16.80 Portland metro, $14.55 nonurban) and Washington ($17.13) require the full state minimum before tips.
• $2.13 (16 states): Alabama, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Nebraska, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia and Wyoming.
• In between: the rest set a higher cash wage with a partial tip credit; for example, Colorado's 2026 tipped cash wage is $12.14 ($15.16 minus a $3.02 credit) (CDLE COMPS Order poster). Michigan's tipped wage rises each year until it reaches 50% of the minimum wage in 2031.
• DC: DOL lists DC's tipped cash wage as 56% of the DC minimum; DC changed its Initiative 82 phase-out in 2025. Some cities, such as Chicago, are phasing out the tip credit locally.
• Some states add tip-certification or tip-pool rules of their own.

Look up your state: DOL WHD: Minimum wages for tipped employees.

When do I owe overtime?

FederalVaries by state

Short answer: Non-exempt employees get at least 1.5 times their regular rate for every hour over 40 in a workweek. Most states follow that rule; a few also require daily overtime (California, Alaska and Nevada after 8 hours in a day; Colorado after 12) or seventh-day pay.

• Federal: 1.5 times the regular rate over 40 hours in a workweek, with no federal daily overtime (DOL WHD overtime).
• Daily overtime (DOL state table, Premium Pay column, July 1, 2026; Colorado from CDLE):
  • California: 1.5x after 8 hours in a day, 2x after 12; on the 7th consecutive day, 1.5x for the first 8 hours and 2x after (CA DIR overtime FAQ).
  • Alaska: after 8 hours in a day, for employers with 4 or more employees.
  • Nevada: after 8 hours in a day, only for employees earning less than 1.5 times the state minimum wage.
  • Colorado: after 12 hours in a day or 12 consecutive hours, in all industries (CDLE COMPS Order poster). The DOL table still describes this as limited to some industries.
  • Oregon: after 10 hours in a day, but only in nonfarm canneries, driers and packing plants.
  • Puerto Rico and the U.S. Virgin Islands also have daily overtime.
• Seventh-day rules: California (above); Kentucky pays a premium on the 7th day of the workweek only when the week passes 40 hours; Connecticut applies one to restaurants and hotel restaurants.
• 2026 reporting wrinkle: the federal "qualified overtime" premium goes in W-2 box 12, code TT. Overtime paid only because of a state daily-overtime rule isn't "qualified" for the federal deduction. See the 2025–2026 changes chapter.

Look up your state: DOL WHD: State minimum wage laws, Premium Pay column, then your state labor department (DOL WHD: State labor offices).

What salary does an employee need to be exempt from overtime?

FederalVaries by state

Short answer: Under federal law, at least $684 a week ($35,568 a year), plus meeting a duties test. The highly compensated employee threshold is $107,432. Some states set a higher salary floor, and then you must meet theirs.

History: a federal court in Texas vacated the 2024 overtime rule in November 2024, DOL dropped its appeal, and DOL removed the 2024 rule's text in a technical amendment announced May 14, 2026 and published May 15, 2026 (FR Doc. 2026-09839) (DOL news release; Federal Register 2026-09839).

States above $684/week (6 states, as of January 1, 2026):

Other states use the federal $684. Salary alone doesn't make someone exempt; the job duties must also fit an exemption under federal and state law.

Look up your state: there is no official multistate table, so check your state labor department (DOL WHD: State labor offices).

How often do I have to pay employees?

FederalVaries by state

Short answer: Federal law sets no pay frequency. Most states require a regular payday at least twice a month, often allowing monthly pay for exempt staff; about 11 require weekly pay for some workers, mostly manual laborers. A handful set no frequency but require you to pay on the schedule you announced.

• Federal: no required frequency; minimum wage and overtime must be paid on the regular payday for the period (DOL WHD: State payday requirements).
• Weekly for some workers: California, Connecticut, Iowa, Massachusetts, Michigan, New Hampshire, New York, Rhode Island, Vermont and Virginia, plus Puerto Rico.
• No general frequency rule: Alabama and Florida set none; North Carolina specifies none; Nebraska lets the employer designate paydays; South Carolina requires only notice of pay terms; Pennsylvania has no entry in the DOL table. Montana presumes semimonthly if no period is set.
• These lists come from the DOL payday table, last revised January 1, 2023 Check each state's current rule, since the table may be out of date..
• How you pay: many states let you require direct deposit only with the employee's consent, or require a no-cost way to get the cash; pay cards have their own rules.

Look up your state: DOL WHD: State payday requirements.

What wage notices do I have to give new employees?

Varies by state

Short answer: Federal law requires no written wage notice, but many states do: at hire, before a pay cut, and an itemized pay statement each payday. The safest practice anywhere is a written offer letter stating pay rate, pay basis, payday and deductions.

How state rules usually work:

• At hire: a written notice of the pay rate, the payday and sometimes the employer's legal name, address and the overtime rate. Some states require it on a state form and in the employee's primary language (New York's Wage Theft Prevention Act is the best-known example).
• Who is covered: some states cover every employer; others start at a headcount (South Carolina's notice applies at 5 or more employees).
• Before a change: advance written notice of a pay cut, often one pay period or a set number of days.
• Each payday: an itemized statement of gross pay and deductions. Most states require one, though federal law doesn't.

Look up your state through its labor department (DOL WHD: State labor offices).

What can I deduct from an employee's paycheck?

FederalVaries by state

Short answer: Deductions required by law (taxes, garnishments, child support) are always allowed. For anything else, most states require the employee's written authorization, and many bar deductions for cash shortages, breakage or uniforms if they cut pay below minimum wage, or ban them outright.

• Federal floor: a deduction that drops pay below $7.25 an hour or cuts into required overtime is an FLSA violation when it's for the employer's benefit (tools, uniforms, shortages) (DOL WHD Fact Sheet #16).
• State rules usually require: signed, dated written authorization stating the reason and amount; advance notice of variable amounts; and limits on recovering shortages or damage. Some states bar any deduction that reduces overtime.

Look up your state through its labor department (DOL WHD: State labor offices).

When is a final paycheck due when someone quits or is fired?

Varies by state

Short answer: Federal law doesn't require immediate final pay. Most states require it by the next regular payday; a minority require it immediately, or within hours, when the employer ends the job. Rules often differ for quits and firings.

• California (CA DIR): fired employees are paid immediately; an employee who quits with 72 hours' notice is paid on the last day, and without notice within 72 hours. Late final pay can cost up to 30 days of wages in waiting-time penalties (CA DIR: Paydays, pay periods and final wages).
• Other fast states: immediately on firing in Colorado, Massachusetts and Nevada; Hawaii immediately or the next business day; Montana within 4 hours or by the end of the business day; Utah within 24 hours; Minnesota within 24 hours of a demand; Missouri on discharge.
• No final-pay statute: Alabama, Florida, Georgia and Mississippi are reported to have none, so the regular payday applies.
• Vacation payout: some states treat earned, unused vacation as wages that must be paid out; others let a written policy decide. Follow your written policy and your state's rule.
• Disputes: many states require you to pay the undisputed amount on time even if part is in dispute.
• Penalties: late final pay can trigger waiting-time penalties or multiples of the unpaid wages in some states.

Look up your state: DOL: Last paycheck and your state labor department.

What happens if I don't pay wages owed?

FederalVaries by state

Short answer: Under the FLSA, an employee can recover unpaid minimum wage and overtime plus an equal amount in liquidated damages and attorney's fees. Many states add their own penalties, some up to three times the unpaid wages, and run their own wage-claim process.

• Federal: back wages plus an equal amount of liquidated damages, generally within 2 years (3 for willful violations) (DOL WHD: FLSA).
• States: penalties range from interest to double or triple damages (South Carolina allows three times unpaid wages), and employees usually can't waive these rights by agreement.

Wage complaints go to the DOL Wage and Hour Division or your state labor department (DOL WHD: State labor offices).

Do I have to give breaks or lunch periods?

FederalVaries by state

Short answer: Federal law doesn't require meal or rest breaks for adults, but if you give a short break (5–20 minutes) it must be paid. About 20 states require meal breaks and about 10 require paid rest breaks. Every FLSA-covered employer must give lactation breaks.

• Federal: short breaks are paid; a real meal period of 30 minutes or more, when the employee is fully relieved, can be unpaid (DOL WHD: State meal period laws).
• State meal breaks (about 20 states) and paid rest breaks (about 10 states, such as California, Colorado, Kentucky, Minnesota, Nevada, Oregon, Vermont and Washington).
• Minors: many states require breaks for workers under 16 or 18 even where adults get none.
• Lactation: see lactation breaks.

Look up your state: DOL WHD: Meal periods and DOL WHD: Rest periods.

What are the federal child labor rules?

Federal

Short answer: Under 14 generally can't work in covered non-farm jobs. Ages 14–15 can work limited hours outside school in safe jobs. Ages 16–17 have no federal hour limits but are barred from hazardous jobs. The stricter of federal and state rules applies.

From DOL WHD Fact Sheet #43 (regulations at 29 CFR 570):

Do teenagers need a work permit in my state?

Varies by state

Short answer: In many states, yes. About 30 states require a work permit or employment certificate for minors, usually under 16 and sometimes under 18, issued by the school or state labor department. Others need only proof of age. States can also set stricter hours than federal law.

• Permits: roughly 30 states require them; some states loosened or repealed them in 2023–2025 (Arkansas dropped its under-16 permit in 2023).
• Hours: many states limit hours for 16- and 17-year-olds on school nights (for example, no work late at night before a school day), which federal law doesn't.
• Breaks and prohibited work: many states add required breaks for minors and bans such as serving alcohol under 18.
• Some states cap their rules at the federal level; others go further. Always follow the stricter rule.

Look up your state: DOL WHD: State employment certificate laws and your state labor department.

When do I need workers' comp in my state?

Varies by state

Short answer: Most states require workers' comp once you have 1 employee. The rest start at 3 to 5 employees, Kansas uses a payroll test, Texas makes it optional for most private employers, and South Dakota doesn't mandate it. Four states sell it only through a state fund.

From our Business Foundation state data (checked Oct 24, 2026):

• Who counts: states differ on whether part-timers, family members, corporate officers and LLC members count toward the threshold. Construction often triggers coverage at 1 employee even where others start higher.
• Exempt work: many states exclude some agricultural, domestic and casual work.
• 1099 workers: paying someone as a contractor doesn't by itself exempt you, and general contractors are often liable for uninsured subcontractors' workers.
• Opting in: owners and employers below the threshold can usually buy coverage voluntarily.

Look up your state: DOL OWCP: State workers' compensation officials, or pick it here:

What happens if I don't carry required workers' comp?

Varies by state

Short answer: Penalties are set by each state and can include daily fines, stop-work orders, criminal charges and personal liability for injured workers' medical bills and lost wages. Some states hold officers personally responsible.

How state penalties usually work:

• Civil fines, often per employee per day or as a multiple of the premium you avoided.
• Stop-work orders that shut the business until you're insured.
• Criminal charges for willful failure, from misdemeanors to felonies in some states.
• Lawsuits: an injured employee can usually sue you directly, and you lose the defenses workers' comp normally gives employers.
• Uninsured employer funds may pay the worker and then come after you.
• Retaliation: firing someone for filing a claim is illegal everywhere.

Benefit levels also change: for example, North Carolina raised its minimum weekly total-disability benefit from $30 to $50 for claims on or after July 1, 2027 (S.L. 2026-14) (NCGA 2026 Labor & Employment Summaries).

Look up your state's workers' comp agency:

How do I buy workers' comp and check that a contractor has it?

Varies by state

Short answer: In most states, buy a policy from a licensed insurer through an agent, or qualify to self-insure. If no carrier will write you, every state has an assigned-risk (residual market) option. In the four monopolistic states (North Dakota, Ohio, Washington, Wyoming) you buy from the state fund.

• Assigned risk: many states' residual markets are administered by NCCI; others run their own.
• Checking a contractor: many state agencies offer an online coverage lookup; otherwise ask for a certificate of insurance before work starts.
• Posters: most states require a workers' comp notice at the workplace, usually supplied by the agency or your insurer.

Look up your state's agency and insurance department:

When do I become liable for state unemployment tax?

Varies by state

Short answer: In most states, once you pay $1,500 or more in wages in a calendar quarter, or have at least one employee in 20 different weeks of a year. Nearly any business with a regular employee meets this in its first year.

How the tests usually work (they track the federal FUTA tests):

Check your state's exact tests; a few states use lower thresholds.

Look up your state's agency:

What are state unemployment tax rates and wage bases in 2026?

Varies by state

Short answer: Each state taxes each employee's wages up to a taxable wage base, at a rate that starts at a fixed new-employer rate and later moves to an experience rate based on your layoff history. For 2026, wage bases run from $7,000 to $78,200, and rates from near 0% to over 10%.

• Wage bases (2026): the floor is the $7,000 FUTA base, used by Arkansas, California, Florida, Louisiana, Tennessee and Puerto Rico. The highest are Washington $78,200 ($82,000 in 2027), Hawaii $64,500, Idaho $58,300, Oregon $56,700 and Alaska $54,200 (DOL ETA: Significant Provisions of State UI Laws, January 2026).
• New-employer rates: a set rate until you build claims history, usually about 1% to 4%. For 2026 the lowest is 1.0% (Alaska, Delaware, Idaho, Iowa, Mississippi, North Carolina, North Dakota, Rhode Island, South Carolina, Vermont); construction can be far higher, such as Pennsylvania's 10.59% (DOL ETA: Significant Provisions of State UI Laws, January 2026).
• Examples (2026, from state agencies): North Carolina: $34,200 base, 1.0% new-employer rate, experienced 0.06%–5.76% (NC DES Tax Rate Information). South Carolina: $14,000 base, new employers at 1% plus a 0.06% assessment, no solvency surcharge for 2026 (SC DEW Tax Rate Information).
• Surcharges: many states add administrative assessments or solvency surcharges when their trust fund is low.
• Employee contributions: only Alaska, New Jersey and Pennsylvania also take UI from employees' pay. 2026: Alaska 0.50% of wages up to $54,200 (Alaska DOL: 2026 experience rates); New Jersey 0.425% (0.3825% UI plus 0.0425% workforce) on $44,800 (NJ Labor: rate information); Pennsylvania 0.07% of all gross wages, uncapped (Pennsylvania DLI yearly UC tax highlights).

Look up your state: DOL ETA: Significant Provisions of State UI Laws, January 2026 and your state agency:

When are quarterly unemployment reports due?

Varies by state

Short answer: Almost every state wants a quarterly wage report and payment by the last day of the month after each quarter: April 30, July 31, October 31 and January 31. Many require a report even in a quarter with no wages.

• Due dates move to the next business day when they fall on a weekend or holiday in most states (for example, Q3 2026's October 31 is a Saturday).
• Electronic filing is required in most states, at least above a small employee count.
• Corrections and records: states allow amended reports for a set number of past quarters and require you to keep payroll records for several years (often 4 to 5).
• Late penalties are set by each state.

Look up your state's agency:

Can I lower or protest my unemployment tax rate?

Varies by state

Short answer: Usually. States mail a yearly rate notice that you can protest by a deadline, and many let you make a voluntary contribution to buy down next year's rate. You can also protest benefit charges for a former employee's claim.

• Rate notice: typically mailed late in the year for the next year, with a protest window of about 15 to 30 days Check your state's window..
• Voluntary contributions: offered in many states, due by a fixed date before the new rate year.
• Charge statements: review them; charges from claims you didn't contest raise future rates.

Look up your state's agency:

How do I respond to an unemployment claim from a former employee?

Varies by state

Short answer: Respond to the state's claim notice by its deadline, often 10 days or so, with the reason for separation. Most states accept responses online, many through the national SIDES system, and set short appeal deadlines.

• Deadlines: commonly about 7 to 14 days to respond to a notice and 10 to 30 days to appeal a decision Check your state's deadlines..
• Missing the deadline can mean the claim is charged to your account even if you'd have won.
• Online only: some states no longer accept paper responses (North Carolina, for example).

Look up your state's agency:

How does federal unemployment tax (FUTA) interact with state UI?

FederalVaries by state

Short answer: FUTA is 6.0% on the first $7,000 of each employee's wages, but paying your state UI on time earns a credit of up to 5.4%, so most employers pay a net 0.6% (up to $42 per employee). Employers in a "credit reduction" state pay more.

• File Form 940 by January 31 (February 10 if all FUTA was deposited on time). Deposit once the accumulated liability exceeds $500 (IRS Topic 759).
• 2025 credit reductions (final): California (1.2%) and the U.S. Virgin Islands (4.5%) (Federal Register, Jan 12, 2026).
• 2026 (potential, not final): DOL's January 15, 2026 list names California (1.5%, or 5.3% if an add-on applies and isn't waived) and the Virgin Islands (4.8%) (DOL FUTA credit reductions). Ignore sites already printing "final" 2026 figures.

Which federal labor law posters do I need?

Federal

Short answer: It depends on your size and industry. Use the free DOL elaws Poster Advisor for your exact list. Most small private employers need the FLSA minimum wage, OSHA and Employee Polygraph Protection Act posters, adding EEOC at 15 employees and FMLA at 50.

• Tool: DOL elaws Poster Advisor. Requirements vary by statute (DOL WHD Posters).
• Wage and Hour posters: FLSA minimum wage, FMLA (covered employers only) and EPPA.
• Commonly required beyond WHD: the EEOC's Know Your Rights poster (15+), OSHA's job safety and health poster, and the USERRA notice.
• E-Verify employers display the E-Verify participation poster from DHS/USCIS.
• The federal contractor minimum wage (EO 14026) was revoked in March 2025 by EO 14236, and DOL no longer enforces 29 CFR part 23, so that poster is no longer needed.

Which state posters do I need?

Varies by state

Short answer: Nearly every state requires its own posters, typically state minimum wage and wage payment, unemployment insurance, workers' comp, workplace safety (in State Plan states) and anti-discrimination notices. State agencies give them away free.

• Where to get them: the state labor department, workforce agency and workers' comp agency, often as one combined poster. Your workers' comp insurer may supply its notice.
• Updates: posters change when rates change (often January 1 and July 1). You don't need to buy a paid "compliance poster" service; the official versions are free.
• Remote staff: some states allow electronic posting for remote workers.

Look up your state through its labor department (DOL WHD: State labor offices) and workers' comp agency:

Do I have to give paid sick leave?

FederalVaries by state

Short answer: Federal law doesn't require paid sick leave for private employers, but 17 states and DC do (20 states counting general paid-leave laws), plus some cities. The usual rule is 1 hour of paid leave for every 30 hours worked, with a yearly cap around 40 hours for most employers and up to 56–72 for larger ones in some states.

• Earned sick leave, as of October 2026 (17 states + DC): Arizona, California, Colorado, Connecticut, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington (DOL Women's Bureau: State paid sick leave laws, Sept 2024); Alaska from July 1, 2025, 1 hour per 30 worked (Alaska DOLWD); and Nebraska from October 1, 2025, for employers with 11 or more employees, 1 hour per 30 worked, capped at 40 hours a year (11–19 employees) or 56 (20+) (Nebraska DOL).
• Paid leave for any reason: Illinois, Maine and Nevada, which brings the total to 20 states plus DC.
• Changes: Missouri's voter-approved law took effect May 1, 2025 and was repealed effective August 28, 2025, so it isn't counted. Virginia expanded paid sick leave to all workers (signed May 20, 2026), starting in July 2027 at 1 hour per 30 worked, up to 5 days a year; today it covers only home health workers. Connecticut's law covers all employers from January 1, 2027. Older counts of "18 states" usually still include Missouri.
• Typical design: accrual of 1 hour per 30 worked (Washington uses 1 per 40), carryover limits, and protected uses such as the employee's or a family member's illness and domestic violence.
• Local laws: some cities and counties have their own; about 18 to 20 states bar local paid-leave mandates.
• The DOL Women's Bureau list is dated September 2024, so it doesn't yet show Alaska, Nebraska, the Missouri repeal or Virginia.
• Voluntary policies: in many states, paid time off you promise in a written policy becomes owed wages.
• Federal FMLA (unpaid, 50+ employees) is in the headcount chapter. The federal tax credit for paid family and medical leave (IRC §45S) was made permanent and expanded (IR-2026-86, Notice 2026-28) (IRS OBBB provisions).

Look up your state: DOL Women's Bureau: State paid sick leave laws, then your state labor department (DOL WHD: State labor offices).

Does my state have a paid family and medical leave program?

Varies by state

Short answer: In 2026, 13 states and DC run paid family and medical leave insurance programs funded by payroll contributions, often split between employer and employee. A few more states run disability insurance (SDI). If you have employees in one of these states, you withhold and report contributions.

• Paying benefits in 2026: California, Colorado, Connecticut, Delaware, DC, Maine, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island and Washington. Delaware and Minnesota benefits started January 2026; Maine's in May 2026. Maryland contributions start January 1, 2027, with benefits in 2028 (New America explainer).
• 2026 contribution rates:

Rows without their own link are from EY, Jan 5, 2026. Most programs cap wages at the Social Security base ($184,500 in 2026); Minnesota uses $185,000. Washington also deducts 0.58% for WA Cares long-term care.

• State disability insurance: California, Hawaii, New Jersey, New York and Rhode Island (and Puerto Rico) (EY, Jan 2026).
• Small employers are often exempt from the employer share but must still withhold and remit the employee share.

Look up your state's program through its labor or workforce agency (DOL WHD: State labor offices).

Do I have to give time off for jury duty or voting?

Varies by state

Short answer: Almost every state bars firing or penalizing an employee for jury service, but most don't require you to pay them for it. A minority require some paid jury days. About 30 states require time off to vote, often paid, when polls aren't open long enough outside work hours.

• Paid jury leave (examples): Alabama, Colorado (first 3 days, up to $50/day), Connecticut (first 5 days), Massachusetts (first 3 days), New York (first 3 days, up to $40/day, more than 10 employees), Tennessee (5+ employees) and DC Check each state's rule on its court or labor site..
• Voting leave: typically 2 to 3 hours, sometimes requiring advance notice from the employee.
• No federal law requires jury or voting leave for private employers (federal law protects jury service only in federal court).

Look up your state through its labor department or state court system (DOL WHD: State labor offices).

Do I have to provide lactation breaks?

FederalVaries by state

Short answer: Yes. Under the federal PUMP Act, every FLSA-covered employer must give reasonable break time and a private space that isn't a bathroom for an employee to express breast milk, for one year after the child's birth. Employers with fewer than 50 employees are exempt only if it would cause undue hardship. Many states add more.

• Source: DOL WHD Fact Sheet #73.
• States: about 30 states and DC have their own workplace lactation laws, some requiring paid breaks or covering longer periods.

Look up your state through its labor department (DOL WHD: State labor offices).

Can I refuse to hire someone who smokes or drinks off the job?

Varies by state

Short answer: It depends on your state. Many states protect employees' lawful off-duty use of tobacco, and some protect any lawful product or lawful off-duty activity. A growing number also limit action over off-duty cannabis use where it's legal.

• Examples: North Carolina protects lawful off-duty use of lawful products at employers with 3 or more employees; South Carolina protects off-duty tobacco use.
• Common exceptions: the product affects job performance or safety, the job has a bona fide occupational requirement, or insurance rate differences are actuarially justified.
• Drug testing and cannabis rules vary widely; check before you set a policy.

Look up your state through its labor department (DOL WHD: State labor offices).

Which state anti-discrimination laws apply to small employers?

FederalVaries by state

Short answer: Federal Title VII and the ADA start at 15 employees and the ADEA at 20, but many state laws start much lower, often at 1 employee, and protect more categories. A complaint can usually be dual-filed with the EEOC and the state agency.

• State thresholds: from 1 employee (for example New Jersey, Michigan, Minnesota, Colorado, New York, Wisconsin, Alaska and DC) to 15 or more (Texas, North Carolina, South Carolina); Alabama and Mississippi have no general private-employer law beyond age.
• Extra protected categories in many states include sexual orientation, gender identity, marital status and others; harassment rules may apply at any size.
• Deadlines: 180 days for an EEOC charge, extended to 300 days where a state agency enforces a similar law.

Look up your state's agency: EEOC: Fair employment practices agencies and dual filing.

Do I need a disclaimer in my employee handbook?

Varies by state

Short answer: It's wise everywhere. Courts in many states can treat handbook promises as a contract unless the handbook clearly says it isn't one and employment is at will. Some states set specific format rules; South Carolina, for example, requires the disclaimer in underlined capital letters on the first page, signed by the employee.

• At-will employment is the default in every state except Montana, which requires good cause after a probation period.
• Have an employment attorney review the disclaimer wording for your state.

Who enforces workplace safety in my state?

FederalVaries by state

Short answer: Federal OSHA covers private employers in most states. In 22 states, an OSHA-approved State Plan covers private employers instead, usually with standards at least as strict. Every state offers free, confidential on-site safety consultation for small businesses.

• State Plans: 22 cover private and public employers; 7 more cover only public employees (OSHA State Plans).
• Severe injury reporting: under federal OSHA, a fatality within 8 hours; inpatient hospitalization, amputation or loss of an eye within 24 hours (OSHA Recordkeeping). State Plans may differ.

Look up your state: OSHA State Plans.

Can my city or county set its own wage or leave rules?

Varies by state

Short answer: It depends on your state. Roughly half the states bar cities and counties from setting their own minimum wage, and about 18 to 20 bar local paid-leave rules. In other states, many large cities have their own minimum wage, sick leave, scheduling or fair-chance hiring rules.

• Preempting states include North Carolina and South Carolina; local ordinances are concentrated in states such as California, Washington, Colorado, Illinois, Maryland, Minnesota, New Mexico, New York and Arizona.
• Local business taxes are a separate question; see local payroll taxes.

Look up your city: UC Berkeley Labor Center inventory and your city or county website.

Do I have to post salary ranges in job ads?

Varies by state

Short answer: In 14 states and DC as of October 2026, yes: you must put a good-faith pay range in job postings, though most laws exempt small employers (cutoffs run from no minimum to 50 employees). Federal law has no such rule.

• Coming: Delaware on September 26, 2027 (26+ employees); Columbus, Ohio enforcement from January 1, 2027 (15+); Cleveland, Ohio has a city law.
• Disclosure on request only: Rhode Island and Nevada require pay ranges when asked or after an interview, not in postings.
• Remote jobs: some laws apply to any posting for a job that could be filled in the state.

Look up your state: there's no official multistate tracker; check your state labor department (DOL WHD: State labor offices).

Are there local payroll or income taxes I have to withhold?

Varies by state

Short answer: In some states. Cities, counties or school districts in a handful of states levy wage taxes that employers withhold, most notably Ohio, Pennsylvania, Kentucky, Michigan, Maryland, Indiana and New York City. Elsewhere, there's usually none.

• Where they apply (about 15 states matter for employers): Ohio municipal and school-district income taxes (Ohio: The Finder); Pennsylvania local earned income and local services taxes, plus Philadelphia's wage tax; 24 Michigan cities including Detroit (Michigan Treasury: cities that impose an income tax); Indiana's 92 counties; Maryland's 23 counties and Baltimore City; Kentucky occupational license taxes; New York City and Yonkers; Kansas City and St. Louis earnings taxes (1%); Alabama and Colorado city occupational taxes; Wilmington, Delaware.
• Oregon: a statewide transit tax of 0.1% is withheld from employees' wages (Oregon DOR). In the Portland area, Metro supportive housing (1%) and Multnomah County Preschool for All (1.5%, plus 3% above $400,000) must be withheld for employees earning $200,000 or more who work in the district, on the amount above $200,000, unless the employee opts out (Portland Revenue Division: withholding). TriMet and Lane Transit district taxes are paid by the employer.
• Employer-paid payroll taxes: Newark, New Jersey charges employers 1% of payroll, filed quarterly, with no tax if quarterly payroll is $2,500 or less (Newark 2026 Payroll Tax Booklet). San Francisco's payroll expense tax was repealed in 2020 (Prop F).
• Where the employee works vs. lives can change which local tax you withhold.

Look up your state revenue agency on the IRS: State government websites page.

Which federal employment laws apply at my company size?

Federal

Short answer: Wage-and-hour, equal pay, I-9, payroll tax and OSHA basics apply from the first employee. OSHA injury logs start above 10, Title VII/ADA/GINA at 15, ADEA and COBRA at 20, FMLA and the ACA mandate at 50, and EEO-1 and WARN at 100.

USERRA is commonly understood to apply to all employers regardless of size.

ACA reporting for 2026 (filed in 2027): furnish Forms 1095-C by about March 2, 2027 and file Forms 1094-C/1095-C by March 1, 2027 on paper or March 31, 2027 electronically; the 2026 affordability percentage is 9.96% (Rev. Proc. 2025-25).

Which state laws depend on how many employees I have?

Varies by state

Short answer: State laws often start well below the federal thresholds. The most common triggers are workers' comp (1 to 5 employees), state anti-discrimination laws (often 1), state E-Verify mandates (all employers to 150+), paid sick leave (often every employer) and state family leave or "mini-WARN" layoff notice laws.

Look up your state through its labor department (DOL WHD: State labor offices).

How do I count employees for FMLA, COBRA and the ACA?

Federal

Short answer: Each law counts differently. FMLA counts employees in 20+ workweeks; COBRA counts part-timers as fractions; the ACA adds full-time employees plus full-time equivalents and combines related companies.

• FMLA (DOL WHD FMLA): private employers with 50+ employees in 20+ workweeks in the current or prior year. An employee is eligible after 12 months of employment and 1,250 hours in the past 12 months, at a site with 50 employees within 75 miles. Leave is 12 weeks unpaid and job-protected (26 weeks for military caregiver leave).
• COBRA (EBSA COBRA guide): 20+ employees on more than 50% of typical business days in the prior calendar year; part-timers count as fractions. Many states have "mini-COBRA" laws for smaller employers.
• ACA employer mandate (IRS: Determining ALE status): an average of 50+ full-time employees (30+ hours a week or 130 a month) plus FTEs in the prior year. FTEs = total part-time hours (capped at 120 per person per month) ÷ 120. Related companies are combined under IRC §414. There's a seasonal-worker exception and a rule for new employers.
• Title VII, ADA, GINA, ADEA (EEOC): count employees who worked at least 20 calendar weeks in the current or preceding year.
• WARN (DOL): 100+ employees, excluding those employed less than 6 of the last 12 months or averaging under 20 hours a week. Requires 60 days' written notice of a plant closing or a mass layoff of 50+ at a site.

If you own several companies, the ACA's aggregation rule can make them one employer. That's a CPA question.

Do I have to keep OSHA injury logs?

Federal

Short answer: Only if you had more than 10 employees at any time last year and aren't in a partially exempt low-hazard industry. Every employer, regardless of size, must report severe injuries.

From 29 CFR 1904.1, OSHA Recordkeeping and OSHA ITA:

• Small-employer exemption: 10 or fewer employees company-wide at all times last year (at peak) are partially exempt from the 300/300A/301, unless OSHA or BLS notifies them in writing.
• Industry exemption: certain low-hazard industries, listed by 2007 NAICS codes.
• Severe injury reporting (everyone): fatality within 8 hours; amputation, loss of an eye or inpatient hospitalization within 24 hours.
• Posting: post the 300A summary February through April.
• Retention: 5 years.
• Electronic filing by March 2: 20–249 employees in Appendix A industries (300A); 250+ (300A); 100+ in Appendix B industries (300 and 301) (29 CFR 1904.41).

State Plan states may have their own recordkeeping rules (OSHA State Plans).

How long do I keep payroll and personnel records?

FederalVaries by state

Short answer: Keep federal employment tax records at least 4 years, FLSA payroll records 3 years and time cards 2 years, I-9s for the later of 3 years from hire or 1 year after separation, and OSHA logs 5 years. States often add their own periods, commonly 3 to 6 years for wage and unemployment records, so many employers keep everything at least 5 to 6 years.

EEOC personnel-record retention (generally cited as 1 year under 29 CFR 1602.14) and benefit-plan records weren't covered in the research.

What payroll information does federal law require me to record?

Federal

Short answer: For each non-exempt worker, record identifying information, the workweek, hours worked each day and week, pay rate and basis, straight-time and overtime earnings, deductions, total wages and pay dates. No particular form is required.

From DOL WHD Fact Sheet #21 (29 CFR Part 516):

• Full name and SSN; address; birth date if under 19; sex and occupation
• The day and time the workweek begins
• Hours worked each day and each workweek
• Basis of pay and regular hourly rate
• Straight-time earnings and overtime earnings
• Additions to and deductions from wages
• Total wages each pay period, the pay date and the pay period covered

IRS employment tax records add names, addresses, occupations, start and end dates, tips reported, W-4s, deposit dates and EFTPS acknowledgment numbers, copies of returns, fringe benefit records and credit documentation (IRS: Employment tax recordkeeping).

Do I need a city, county or state business license?

Varies by state

Short answer: Often, but it depends on your state and city. A few states issue a general state business license; most leave general licensing to cities and counties, and some places have none. Many trades also need a state occupational license.

• How it usually works: a city or county issues a business license or business tax certificate, sometimes with a fee based on gross receipts; renewals are often yearly. Some states standardize local licenses (South Carolina's Act 176 sets a May 1–April 30 license year statewide), and some have abolished general local business taxes (North Carolina in 2015).
• State licenses: a few states require a general state business license (for example Washington and Alaska); every state licenses certain trades and professions.
• Sales tax permit: if you sell taxable goods or services, you also register with the state revenue agency.
• Federal licenses apply only to certain activities (for example alcohol, firearms, transportation) (SBA: Apply for licenses and permits).

Look up your state:

Do I need a permit to run a business from my home?

Varies by state

Short answer: Usually, check your city or county zoning code. Many places require a home occupation permit, or set conditions without a permit, that limit signs, customer visits, parking and employees who don't live in the home. HOA rules and leases can add more limits.

• Common conditions: all activity indoors; no exterior signs beyond a small one; clients by appointment; a cap on vehicles; often no non-resident employees working at the home (Charlotte, NC, for example, allows only residents to work there).
• Why it matters for payroll: if your zoning bars non-resident employees at home, new staff need to work somewhere else.
• Live-work permits in some cities allow employees or customers with neighbor notice.

Look up your city or county's zoning or planning office, and start from the local requirements link for your state:

Do I have to file business personal property returns?

Varies by state

Short answer: In most states, yes. Businesses list equipment, furniture, fixtures and sometimes inventory with the county assessor (or the state) each year, usually early in the year, and pay local property tax on it. About 13 states exempt business personal property entirely.

• Exempt states: roughly 13, such as Delaware, Hawaii, Illinois, Iowa, Minnesota, New Hampshire, New York, North Dakota, Ohio, Pennsylvania, South Dakota and Wisconsin (from 2024) (Tax Foundation: tangible personal property).
• How it usually works: a return due early in the year (January in some states, spring in others), late-filing penalties (often around 10%), and many states exempt small totals below a dollar threshold.
• Examples: North Carolina counties take listings January 1–31; South Carolina businesses file a return due four months after year-end and are assessed at 10.5% of depreciated value.

Look up your county assessor or state revenue agency (IRS: State government websites).

What happened to the 2024 overtime salary increase?

Federal

Short answer: It's gone. A federal court vacated the 2024 rule in November 2024, and DOL formally removed it from the regulations on May 15, 2026. The exempt salary floor stays at $684 a week ($35,568 a year), with the HCE threshold at $107,432.

DOL announced the technical amendment May 14, 2026 and published it May 15, 2026 (FR Doc. 2026-09839), after dropping its Fifth Circuit appeal (DOL news release; Federal Register 2026-09839; summaries by IEC and LeadingAge). Some states set higher floors; see exempt salary.

Is the DOL changing the independent contractor rule?

Federal

Short answer: It has proposed to. A February 2026 proposal would rescind the 2024 rule and return to a "core factors" test focused on control and opportunity for profit or loss. As of the latest sources, it was still a proposal, and DOL wasn't enforcing the 2024 rule.

Published at 91 FR 9932 (Feb 27, 2026), comments closed April 28, 2026 (DOL WHD: Misclassification rulemaking). Details are in the classification chapter.

Do I still have to file a beneficial ownership (BOI) report?

Federal

Short answer: Not if your company was formed in the US. FinCEN's final rule, issued August 11, 2026 and effective August 14, 2026, permanently exempts domestic companies and US persons. Only foreign entities registered to do business in a US state still report.

The March 26, 2025 interim final rule first removed domestic reporting; the 2026 final rule made it permanent (FinCEN BOI). Ignore mailers that say otherwise.

What changed on the 2026 Form W-2?

Federal

Short answer: Starting with 2026 W-2s, you report qualified overtime in box 12 code TT, cash tips in code TP and Trump account contributions in code TA. Box 14 splits into 14a (other) and 14b (tipped occupation codes).

• Why: the One Big Beautiful Bill Act (P.L. 119-21) created employee deductions for qualified overtime (up to $12,500, or $25,000 joint, phasing down above $150,000 MAGI / $300,000 joint) and qualified tips (up to $25,000), for 2025 through 2028. Tips and overtime remain subject to FICA and income tax withholding (IRS FS-2026-13; IRS Pub. 15 (2026)).
• What counts as qualified overtime: generally the half-time premium the FLSA requires. Overtime beyond what the FLSA requires (for example, state daily overtime or a voluntary policy) is excluded. Report the full qualified amount in box 12, code TT. Mistakes require a W-2c.
• No more transition relief: Notice 2025-62 relieved 2025 reporting; that relief doesn't extend past 2025.
• New codes (PayrollOrg, Jan 12, 2026; confirm at IRS Form W-2):

Practical step: make sure your payroll provider is tracking FLSA overtime premiums for non-exempt employees so box 12 TT is right at year-end.

What other 2026 federal payroll changes should I know?

Federal

Short answer: The Social Security wage base is $184,500 (rising to $192,300 for 2027), the 1099-NEC threshold rose to $2,000, employers can contribute up to $2,500 a year to employees' Trump accounts starting July 4, 2026, the I-9 expiration date was extended to 05/31/2027, and the WOTC hiring credit lapsed for hires after 2025.

• Social Security wage base: $184,500 for 2026 (IRS Pub. 15 (2026)); $192,300 for 2027 (SSA contribution and benefit base).
• 1099-NEC/MISC: $2,000 threshold for 2026 payments, indexed starting 2027 (IRS 1099 Instructions).
• Trump accounts: employer contributions up to $2,500 per employee or dependent per year, generally excluded from the employee's income and deductible to you; total contributions capped at $5,000 a year; contributions began July 4, 2026 (IRS OBBB provisions).
• Paid family leave credit (§45S): made permanent and expanded (IR-2026-86, Notice 2026-28). Details weren't reviewed for this guide.
• Form W-4: new 2026 version with a Step 4(b) deductions worksheet for tips and overtime.
• Form I-9: expiration extended to 05/31/2027 (USCIS).
• Work Opportunity Tax Credit: lapsed for wages paid to hires after December 31, 2025, and not renewed as of a May 13, 2026 Congressional Research Service report (DOL ETA: WOTC).
• Federal contractor minimum wage: EO 14026 revoked by EO 14236 (March 14, 2025) (DOL WHD Posters).
• Reported but not verified: a dependent care FSA limit increase to $7,500 and an expanded §45F childcare credit.

What kinds of state changes should I watch for each year?

Varies by state

Short answer: Every January (and often July) brings new state minimum wages, unemployment wage bases and rates, paid leave programs and income tax rates. Some changes land mid-year, so check your state's labor, workforce and revenue sites at the start of each year and after the legislative session.

What changed in 2026, as examples:

• Minimum wage: 19 states raised rates on January 1, 2026 (NELP).
• Paid leave: Delaware and Minnesota paid family and medical leave benefits began in January 2026, Maine's in May 2026; Maryland contributions start January 1, 2027.
• Income tax: several states cut rates for 2026 (North Carolina's flat rate fell to 3.99%). South Carolina rewrote its 2026 brackets in March 2026 (Act 110), after its 2026 withholding tables were out, leaving employers to watch for revised tables.
• Unemployment: wage bases moved in many states (North Carolina's rose to $34,200).
• Immigration: Indiana's employer law took effect July 1, 2026 (see state E-Verify).
• Local preemption: some states expanded preemption of local labor rules (North Carolina's S.L. 2026-41).

Look up your state's agencies:

Which federal agencies handle employer registration and HR rules?

Federal

Short answer: The IRS handles EINs and payroll taxes, the DOL handles wages, overtime, FMLA and posters, USCIS handles the I-9 and E-Verify, the EEOC handles discrimination, and OSHA handles safety records.

Which state agencies will I deal with, and how do I find mine?

Varies by state

Short answer: Most employers deal with six kinds of state offices: the revenue department (withholding, sales tax), the workforce agency (unemployment insurance), the labor department (wages, child labor, posters), the workers' comp agency, the Secretary of State (entity filings) and the state new hire directory.

Where do I go when a tax problem isn't getting resolved?

FederalVaries by state

Short answer: For federal problems, the IRS Taxpayer Advocate Service helps when normal channels haven't fixed an issue. Most states have their own taxpayer advocate or ombudsman inside the revenue department.

• Federal: Taxpayer Advocate Service, an independent organization within the IRS.
• State: search your revenue department's site for "taxpayer advocate" or "ombudsman" (IRS: State government websites). State advocates usually don't handle county or city taxes.