Compliance Round Up – New I.R.S. Reporting Rules, State Retirement and Immigration Mandates, and a Third Circuit Overtime Ruling (June 2026)

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Written By
Jennifer Kiesewetter
Published On: June 29, 2026

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.

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June brought updates across payroll reporting, benefits limits, immigration compliance, state retirement programs, and wage-and-hour litigation. The Internal Revenue Service changed how employers report tips, overtime, and employer contributions to a new savings vehicle on the 2026 Form W-2, and set fresh contribution limits for health savings accounts. States added retirement, portable-benefit, and immigration-enforcement requirements. A federal appeals court handed wage-and-hour defendants a notable win. Six developments deserve the attention of H.R. professionals.

Federal News

Effective Date: New reporting applies to the 2026 tax year; employers furnish updated forms to workers in January 2027.

What’s Changing:

The Internal Revenue Service finalized the 2026 General Instructions for Forms W-2 and W-3, and the changes flow from the One Big Beautiful Bill Act (Public Law 119-21). The form now carries three new Box 12 codes: Code TP captures cash tips that may qualify for the new federal deduction; Code TT captures qualified overtime compensation; and Code TA captures employer contributions to the new Trump Account savings program. The 2026 instructions also split Box 14 into Box 14a and Box 14b so that employers can report Treasury tipped-occupation codes where required.

Three details matter for payroll:

  • Only overtime required under the Fair Labor Standards Act counts, and only the premium portion—Code TT reports solely the extra half of F.L.S.A. overtime pay, not the full overtime amount.
  • State daily overtime and contractual overtime do not qualify.
  • Tips and overtime also remain fully subject to payroll taxes, so the new codes change reporting, not withholding.

The instructions ask employers to identify tipped employees by occupation code — which is what allows those workers to claim the deduction on their own returns—directing employers to use Box 14b to report the relevant Treasury tipped-occupation code or codes.

What this means for HR:

  • Confirm that your payroll vendor will populate Box 12 codes TP, TT, and TA before year-end processing begins.
  • Separate the F.L.S.A. overtime premium from total overtime pay so that Code TT reports only the qualifying amount.
  • Map tipped roles to the correct I.R.S. occupation codes now, rather than during the January rush.

Effective Date: Announced in Revenue Procedure 2026-24 (issued May 2026); the amounts apply for calendar year 2027.

What’s Changing?

In Revenue Procedure 2026-24, the I.R.S. set the 2027 inflation-adjusted figures for health savings accounts and related plans. The self-only H.S.A. contribution limit rises to $4,500 and the family limit to $9,000; the catch-up contribution for account holders fifty-five and older stays at $1,000.

The companion high-deductible health plan figures moved as well. A qualifying plan must carry a minimum deductible of $1,750 for self-only coverage or $3,500 for family coverage, and out-of-pocket maximums cannot exceed $8,700 for self-only or $17,400 for family. The maximum newly available amount for an excepted-benefit health reimbursement arrangement rises to $2,250.

What this means for HR:

  • Update open-enrollment materials and H.S.A. payroll elections to reflect the 2027 contribution ceilings.
  • Confirm that your medical plans still meet the new H.D.H.P. deductible and out-of-pocket thresholds before renewal.
  • Communicate the higher limits to employees early, since the catch-up figure held flat while the core limits rose.

Trending State News

Effective Date: Governor Bob Ferguson signed House Bill 2105 on March 30, 2026; the act took effect June 11, 2026, with core employer obligations beginning October 1, 2026.

What’s Changing?

Washington enacted the Immigrant Worker Protection Act through House Bill 2105, adding notice duties when a federal agency seeks to review employment-eligibility records. When immigration authorities request an employee’s Form I-9, the employer must notify affected workers within five business days, in English and the five other most common languages in the state.

The notice may be posted in a conspicuous spot at the work site or delivered through the employer’s usual channel—hand delivery, mail, e-mail, or text. After inspection results arrive, the employer has another five business days to give each affected worker individual notice of the obligations that follow. The state attorney general will publish a model notice by September 1, 2026. Civil penalties run $500 per violation, doubling to $1,000 for willful or repeat conduct. The law also bars retaliation against workers who exercise their rights.

What This Means for HR:

  • Build a five-business-day I-9 inspection notice process before the October 1, 2026, compliance date.
  • Plan for multilingual notices and adopt the attorney general’s model version once it is published.
  • Train front-line managers to route any federal records request to a designated contact without delay.

 

Effective Date: July 1, 2026 (House Bill 4073, signed April 2026).


What’s Changing?


Mississippi created the Mississippi Work and Save Program through House Bill 4073, giving employers that do not sponsor a retirement plan a way to offer payroll-deduction savings. The default account is a Roth individual retirement account invested in a target-date fund; the state treasurer may add a traditional I.R.A. option. This is a state-sponsored savings vehicle, not a traditional employer retirement plan.

Participation is voluntary for both employers and workers, which sets Mississippi apart from the automatic-enrollment programs several other states have adopted. Eligible employees choose whether to contribute and at what level, and the savings follow them from job to job.


What This Means for HR:

  • Decide whether to adopt the state program or establish your own qualified plan before July 1, 2026.
  • Review payroll systems for the deduction and remittance steps a state-sponsored I.R.A. requires.
  • Explain to employees how the voluntary program works so that any decision to participate is an informed one.

Effective Date: July 1, 2026 (House Bill 987, signed May 2026).

What’s Changing?

Georgia enacted the Voluntary Portable Benefit Plan Act through House Bill 987, a voluntary framework that lets companies contribute to portable benefit accounts for independent contractors without putting the contractors’ status at risk. The accounts can hold contributions toward health coverage, paid time off, retirement savings, and emergency funds.

The law addresses a longstanding concern in the gig and contract economy, where offering benefits has sometimes been taken as evidence of an employment relationship. Georgia treats a contribution as a benefit rather than a marker of control, providing companies with a more defensible way to support their contract workers.

What This Means for HR:

  • Evaluate whether portable benefit contributions fit your contractor engagement model in Georgia.
  • Document that any contributions flow through the statutory framework, not an employment relationship.
  • Coordinate with legal and benefits teams before extending accounts to multistate contractor pools.

Around the Courts

Effective Date: Decided June 3, 2026 (Secretary of United States Department of Labor v. Comprehensive Healthcare Management Services, LLC, U.S. Court of Appeals for the Third Circuit).

What’s Changing:

In Secretary of United States Department of Labor v. Comprehensive Healthcare Management Services, LLC, the United States Court of Appeals for the Third Circuit held that the Fair Labor Standards Act does not recognize claims for “overtime gap time”—unpaid straight-time work in a week when an employee also worked overtime yet still earned above the minimum wage on average. The two-to-one decision trimmed a $35.8-million judgment the Department of Labor had won on behalf of roughly six thousand nursing and rehabilitation employees.

Chief Judge Michael Chagares wrote that the statute requires a minimum wage under Section 206 and overtime under Section 207 but that its text “does not contemplate overtime gap time.” The court declined to defer to the D.O.L.’s contrary guidance, finding the statute clear. The ruling deepens a circuit split: the Fourth Circuit allows these claims, while the Second and Third Circuits now reject them. The court also held that an employer proves an exemption by a preponderance of the evidence rather than the stricter “plainly and unmistakably” standard, and returned the exemption question to the trial court.

What This Means for HR:

  • Treat the gap-time defense as available in the Third Circuit, while expecting continued exposure in the Fourth.
  • Audit payroll to confirm that employees are paid for every hour worked, since accurate timekeeping remains the cleanest defense.
  • Reassess exempt classifications under the court’s preponderance standard rather than the older, stricter test.

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