Compliance Round Up – IRS on Tips and Contribution Limits, Pay Transparency, Sick Time, and More News Around the Courts

By Published On: November 18, 2025

Jenny Kiesewetter is a practicing ERISA and employee benefits attorney who partners with HR teams on a wide range of workplace compliance matters — from benefit-plan obligations to day-to-day HR policies and regulatory requirements. Her guidance helps employers spot risks early, navigate regulatory change, and make informed decisions that support both employees and the organization.

Federal News

Federal agencies are stepping up enforcement while states push through 2026 compliance deadlines. From immigration and affirmative action to pay transparency and wage hikes, here’s what moved this month — and what HR should fix before year-end.

Effective Date: November 2025

What’s Changing: The IRS announced it will not assess penalties tied to reporting “no-tax tips” and “no-tax overtime” amounts on Forms W-2 or 941 for the 2025 tax year. Employers can effectively disregard these fields without fear of late-year compliance exposure while the agency revisits the underlying reporting mechanics.

What This Means for HR:

  • Confirm your payroll system does not reject files missing no-tax tip or overtime fields.
  • Coordinate with payroll vendors to ensure year-end W-2 prep remains consistent with IRS guidance.
  • Brief finance and payroll teams so they don’t overcorrect or attempt unnecessary manual adjustments.
  • Document this temporary IRS position in your 2025 compliance file in case of future inquiry.

Effective Date: January 1, 2026

What’s Changing? The IRS released the updated retirement plan and IRA contribution limits for 2026. Below is a quick reference chart capturing the limits HR and payroll will update first — 2025 versus 2026.

Limit Type 2025 Limit 2026 Limit
401(k)/403(b)/457(b) Elective Deferral $23,500 $24,500
Annual Additions (415(c)) $70,000 $72,000
Catch-Up Contribution (Age 50+) $7,500 $8,000
Traditional/Roth IRA Contribution $7,000 $7,500
IRA Catch-Up (Age 50+) $1,000 $1,100

 

What This Means for HR:

  • Update payroll systems and plan-year communications to reflect the 2026 limits.
  • Coordinate with recordkeepers to ensure automatic features (auto-escalation, annual increase caps) align with new thresholds.
  • Remind employees hitting the 2025 limits that higher deferrals will be allowed in January.
  • Review any plan-document provisions that “hard code” contribution limits instead of incorporating them by reference.

Trending State News

Effective Date: To Be Finalized After Rule Adoption (Comment Period Closed November 14, 2025)

What’s Changing? The New Jersey Department of Labor released proposed regulations to clarify the state’s Pay and Benefit Transparency Act (NJPBTA), which took effect on June 1, 2025. This new guidance will address how the NJPBTA applies to remote work, third-party recruiters, multi-state operations, and what must be included in a compliant job posting.

The NJPBTA applies to employers that:

  • Have 10 or more employees over 20 or more calendar weeks; and
  • Do business, employ workers, or take applications for employment in New Jersey.

What This Means for HR:

  • Audit job postings for realistic and compliant pay ranges (upper/lower limits can’t exceed the 60% rule).
  • Evaluate whether remote applicants in New Jersey bring you under the law even without a physical NJ location.
  • Update contracts with staffing firms and recruiters to shift compliance responsibility.
  • Prepare to meet the “reasonable efforts” standard for internal promotion postings.

Effective Date: November 2025

What’s Changing? On October 25, 2025, NYC expanded required sick-leave protections under the Earned Safe and Sick Time Act (ESSTA). Beginning February 22, 2026, employers must provide an additional 32 hours of unpaid safe and sick time and comply with newly expanded qualifying circumstances for both paid and unpaid leave. This update follows the City’s recent move to require 20 hours of paid prenatal leave, which is now written directly into ESSTA instead of appearing only in the regulations.

What This Means for HR:

  • Update sick-time policies immediately.
  • Adjust leave tracking systems to account for the new unpaid-leave entitlement.
  • Train managers on documentation and non-retaliation rules.

Effective Date: December 3, 2025 (with enforcement beginning on January 1, 2027)

What’s Changing: Columbus expanded its pay transparency ordinance to require salary ranges in job postings.

What This Means for HR:

  • Add pay-range fields to job posting templates.
  • Train recruiters to answer pay-range inquiries consistently.
  • Conduct a quick audit to ensure ranges are defensible and internally consistent.

Around the Courts

Effective Date: November 2025

What’s Changing: A New Jersey federal court dismissed a retaliation suit filed by a remote worker, holding that claims tied to employment decisions made and felt in Pennsylvania must be litigated there — even if the employer had operations elsewhere.

What This Means for HR:

  • Confirm your remote-work agreements specify governing law and venue.
  • Review multi-state HR practices to ensure consistent handling of complaints.
  • Work with counsel to avoid jurisdictional surprises in remote-employee disputes.

Filed: October 16, 2025

What’s Changing? The 11th Circuit reaffirmed a fact-specific “economic-reality” test and rejected arguments seeking a narrower contractor standard. The analysis turns on whether the worker is economically dependent on the business — looking at the level of control, the worker’s real opportunity for profit or loss, and how essential the work is to the company’s operations.

What This Means for HR:

  • Reevaluate contractor classifications, especially recurring or long-term projects.
  • Update documentation supporting true independence.
  • Consider a contractor audit for 2026 planning.

Effective Date: November 2025

What’s Changing? On October 25, 2025, NYC expanded required sick-leave protections under the Earned Safe and Sick Time Act (ESSTA). Beginning February 22, 2026, employers must provide an additional 32 hours of unpaid safe and sick time and comply with newly expanded qualifying circumstances for both paid and unpaid leave. This update follows the City’s recent move to require 20 hours of paid prenatal leave, which is now written directly into ESSTA instead of appearing only in the regulations.

What This Means for HR:

  • Update sick-time policies immediately.
  • Adjust leave tracking systems to account for the new unpaid-leave entitlement.
  • Train managers on documentation and non-retaliation rules.

Effective Date: October 22, 2025

What’s Changing? The Supreme Judicial Court held that retention bonuses conditioned on staying employed through a future date do not count as wages. Specifically, the court said, “[b]ecause the function of the payments was something other than typical compensation for typical work, they were not wages.” 

What This Means for HR:

  • Review bonus agreements to ensure clear conditions and payment timing.
  • Confirm that offer letters and retention agreements do not inadvertently create wage entitlements.
  • Document eligibility criteria to avoid later disputes.

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The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.

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