From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.

HR Brew

Courtney Vinopal

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Legislative Lowdown recurring feature illustration

DOL’s independent contractor rule takes effect 

The rule takes aim at worker misclassification, and is expected to make it more difficult for companies to categorize workers as independent contractors, rather than employees. 

Legislative lowdown: Independent contractor rule takes effect 

Adam DeRose

Outside of the US Supreme Court building surrounded by the Christian cross, symbol of Islam, and Star of David

More religious accommodation requests following the Groff v DeJoy Supreme Court decision

HR Brew speaks with an employment attorney about best practices under the clarified standard.

Following the Supreme Court’s decision on religious accommodations, more requests have found their way into the courts

Kristen Parisi

The top of a globe with a phone, notebook, laptop, glasses, iPad and coffee cup floating above it

Right to disconnect from work in Australia

Employers who violate the law could face financial penalties.

World of HR: Australia passes right to disconnect law

A clipboard with a checkmark icon denoting HR compliance

Compliance

An illustration of reporter Courtney Vinopal's headshot.

The Federal Trade Commission (FTC) moved to 

 on Sept. 5 that it had filed in response to lawsuits challenging a proposed ban on most noncompete agreements. With the dismissal, the FTC signaled it will no longer go forward with the ban, 

 via a final rule in April 2024, when President Joe Biden was in office.

Andrew N. Ferguson, who President Donald Trump appointed to serve as FTC chairman in January, was among the commission members who dissented the ban in 2024, arguing the agency didn’t have the statutory authority to issue such a rule. In a 

 regarding the decision to withdraw one of its appeals, Ferguson said the Biden-era rule’s “illegality was patently obvious.”

Though the FTC’s decision puts an end to legal back-and-forth over a ban that never took effect, Ferguson said the agency will continue to target unlawful noncompete agreements.

The rule issued in 2024 would’ve had a significant impact on employers that rely on noncompete agreements, affecting some 30 million workers,

 last year. Noncompetes typically prevent workers from joining a competing firm for a certain period of time, and are common in industries like warehousing and medicine. In recent years, this practice drew criticism due to concerns it may limit workers’ salary potential and career mobility, as well as hamper competition.

The rule would have banned nearly all such contracts, and invalidated those currently in effect, except for noncompetes applying to certain senior executives. The US Chamber of Commerce immediately sued to block the ban, though, and it never took effect due to 

Though HR departments no longer have to prepare to comply with a federal noncompete ban, these contracts are already heavily regulated at the state level. Four states—California, North Dakota, Oklahoma, and Minnesota—fully 

, while others restrict the circumstances when employers can use them (i.e. only in contracts with highly compensated employees).

As such, it’s likely compliance pros already have this issue on their radars. The FTC is asking the public to submit information about the “scope, prevalence, and effects” of noncompetes as part of its efforts to investigate and enforce the law against “bad actors,” Ferguson said in his statement.

Employers may have legitimate reasons for using noncompetes, such as protecting trade secrets or client relationships, but they should be clear about why they’re asking workers to enter into such an agreement, HR Brew 

. Should a noncompete be potentially unlawful, they can consider including other types of restrictive covenants in employment contracts to ensure such protections.

FTC drops appeals over noncompete ban 

The decision puts an end to legal back-and-forth over a rule that would have banned most noncompete contracts in the US.

Legislative lowdown: FTC dismisses appeals over noncompete ban

A program providing paid family and medical leave (PFML) to Maine-based workers has been upheld by the state’s Supreme Court.

Bath Iron Works, a Navy ship manufacturer based in Bath, Maine, along with the Maine State Chamber of Commerce, sued the state’s Department of Labor (MDOL) in January. The Maine Supreme Court sided with the Department of Labor in an 

, allowing the rules for implementing the state’s PFML program to stand.

The plaintiffs argued Bath Iron Works shouldn’t be subject to mandatory quarterly taxes that started in January to fund the program, as it intends to offer a private leave program in lieu of the state-funded one. While the law establishing PFML says that employers with private plans approved by the state may be exempt from this tax, the MDOL didn’t start reviewing such plans until April. This means that in the interim, Bath Iron Works is still required to pay into the state’s PFML program.

The plaintiffs also argued the rules for implementing the state-sponsored program constitute “a taking of private property for public use” under Maine’s constitution. The Maine Supreme Court disagreed with both of these arguments.

The decision means the MDOL will continue to collect payroll contributions from employers in the state for PFML, with workers entitled to start receiving benefits in May 2026. Contribution 

 depending on the size of the employer; businesses that employ 15 or more Maine employees must contribute a premium equivalent to 1% of workers’ wages, and have the option to withhold half of that premium from workers’ paychecks.

Maine businesses that intend to provide leave benefits through a private plan, rather than the state’s program, may apply to be exempt from the payroll tax through the state’s paid leave 

. The substitute plan must meet a number of criteria to qualify for this exemption, providing benefits that are “substantially equivalent” to Maine’s PFML plan.

Most Maine workers will be eligible to take up to 12 weeks of paid leave when the program is fully rolled out next year, as the law applies to employers of any size, and extends to self-employed workers, as well. The leave can be used for a variety of reasons, including bonding with a child following a birth, fostering or adoption, as well as caring for oneself or a family member dealing with medical needs.

 in 13 states and Washington, D.C. Minnesota’s PFML program, like Maine’s, 

 from some members of the business community, but is nevertheless 

Meanwhile, the start of a paid family leave program in Maryland has been delayed several times, most recently 

 about changes affecting the federal workforce. Employers and workers are now expected to begin contributing to that program in January 2027.

Even in states that subsidize paid leave, workers still rely primarily on their employer to navigate information about these benefits, HR Brew 

. In light of this, HR leaders can educate themselves about new laws coming into effect, as well as what benefits employees are entitled to under these programs. They can also foster a culture where workers are encouraged to take time off to bond with a child, for example, as research shows some parents leave the benefit on the table due to fears of job loss or career setbacks.

Maine Supreme Court allows paid family leave to stand

A business and the state’s chamber of commerce sued over Maine’s paid family leave program, arguing employers shouldn’t be taxed if they intend to use a private option. 

Legislative lowdown: Maine’s high court upholds paid family leave program

A policy that was embraced by both the Democratic and Republican candidates during the 2024 presidential campaign made it into the final version of the recently enacted tax and budget bill, and will affect employers in the service industry starting next year.

The provision in President Donald Trump’s “One Big Beautiful Bill,” called “No Tax on Tips,” will allow eligible tipped workers to deduct up to $25,000 from their tipped income each tax year from 2025 to 2028.

The Internal Revenue Service (IRS) recently published a draft W-2 form taking this policy change into account, and said it would publish a list of occupations that may be eligible to take advantage of the tax break in early October.

How taxes will change for tipped workers in 2026. 

Federal law allows employers to pay their tipped workers as little as $2.13 an hour provided that amount, combined with tips, comes out to $7.25 (the federal minimum wage).

Workers that receive at least $20 a month in tips have to report these earnings to the IRS, and pay taxes on them if their gross income reaches a certain level. President Trump 

 this practice, as did his Democratic opponent, Kamala Harris.

The final “No Tax on Tips” provision that made it into the Republican tax bill will allow workers in jobs that “customarily and regularly received tips” on or before Dec. 31, 2024 to claim the deduction. Workers who report $150,000 or more in gross income will see the deduction reduced and ultimately phased out.

The policy is unlikely to affect the entire tipped worker population (roughly 2.5% of all workers), as more than one-third (37%) of workers 

tax for this reason, according to The Budget Lab.

What this means for employers with tipped workers. 

 published by the IRS on Aug. 15 includes a section for employers to report employees’ “qualified tips” using the code “TP,” as well as a place to report an employee’s “tipped occupation code.”

It’s not yet clear what type of work will fall under the provision. The IRS is required to publish a list of occupations that fall under the “customarily and regularly received tips” category by Oct. 2.

Additionally, the IRS is expected to give employers additional guidance on how to calculate the amount of “qualified tips” a worker earned. For the purpose of this deduction, tips paid voluntarily via cash or credit card should count, but it’s 

 whether automatic charges such as mandatory gratuities will fall under this category.

 it would provide “transition relief” to workers claiming the deduction, as well as employers, in light of the new reporting requirements.

The draft W-2 also includes modifications linked to additional provisions from the tax bill that are set to change the way employers report on workers’ earnings.

 for a tax deduction on their overtime pay, so businesses will need to report overtime compensation if they have workers that qualify for that deduction. Additionally, employers will have the option to 

 on behalf of their employees’ kids starting next year—a benefit that will also need to be reported on a W-2 form.

IRS’s draft W-2 for 2026 incorporates “No Tax on Tips”

Employers with tipped workers are set to see reporting requirements change as a result of a new tax deduction, but some details are still being worked out.  

Legislative lowdown: IRS publishes draft W-2 for 2026 incorporating “No Tax on Tips”

The Department of Labor (DOL) recently rescinded a supplement statement issued in December 2021 that said most plan fiduciaries were “not likely suited to evaluate the use of [private equity] investments” in individual account plans such as 401(k) accounts.

This rescission was made in response to an 

 seeking guidance for more employers to offer “alternative assets,” such as private equity and cryptocurrencies, as an investment option in 401(k) accounts. With the executive order, President Donald Trump’s administration is resuming efforts to increase the presence of such investments in workers’ retirement accounts, which started during his first term.

 in response to a query from a law firm representing Pantheon Ventures and Partners Group, which have both advocated for offering private equity as an investment option in 401(k) accounts.

An official with the DOL wrote that offering private equity as a “designated investment alternative” in a retirement plan would not necessarily violate the Employee Retirement Income Security Act (ERISA), which requires fiduciaries to act in the best interests of their plan participants, as well as select investments that are prudent.

After President Joe Biden took office, though, the DOL expressed concern in a 

 that the 2020 letter might prompt plan fiduciaries to misread “the letter as saying that PE [private equity]—as a component of a designated investment alternative—is generally appropriate for a typical 401(k) plan.” The statement further expressed concern about most plan fiduciaries’ ability to evaluate private equity investments in this context.

The DOL rescinded this statement on Aug. 12. In a 

, Deputy Secretary Keith Sonderling said Americans’ ability to save for retirement had been hampered by “unnecessary government overreach,” and suggested repealing this guidance could help build “a future where innovative retirement products can deliver increased upside, diversification, and security to the American worker.”

What Trump’s push for alternatives could mean for workers. 

Just 2.4% of retirement plans include private equity as an investment option, but the private equity industry is 

Part of employers’ hesitation around incorporating private equity into their 401(k) plans stems from the fact that such investments 

 than public stocks, and have higher fees associated with them. Such fees have gotten some employers into hot water—Intel, for example, was sued in 2015 by employees who alleged the company violated its fiduciary duties by including alternative assets, including private equity, in its retirement plans. The case was dismissed by a federal court in California, though, and that dismissal was 

The Aug. 7 executive order issued by the Trump administration seeks to reduce “regulatory burdens and litigation risk” associated with these investments, so HR leaders may expect to see additional actions to that end in the near future. The order calls on the DOL to develop guidance regarding a fiduciary’s duties under ERISA when it comes to making alternative assets available to retirement plan participants, as well as clarify its position on alternative assets, within 180 days.

Even though the Trump administration has voiced its support for employers that want to offer assets like 

 or private equity in 401(k) plans, making such options available would still require companies to undergo a robust fiduciary process, HR Brew 

Labor Dept. voices support for private equity in retirement plans

The agency suggested “innovative retirement products” could help Americans diversify their retirement savings.

Legislative lowdown: DOL rescinds Biden-era guidance discouraging private equity in 401(k) plans

The contribution limit for dependent care flexible spending accounts (FSAs) is 

 from $5,000 to $7,500 annually next year due to a provision in the recently enacted Republican tax bill.

This means that employees with dependents may set aside up to $7,500 pre-tax dollars to use on expenses like daycare or preschool ($3,750 for married individuals filing their taxes separately). FSAs are the most common family care benefit employers offer, according to SHRM, ahead of childcare referral services or backup care.

But employers are still considering whether to adopt the increased FSA contribution limit, according to a flash poll of 903 clients conducted by consulting firm Mercer on August 7. Forty-three percent of clients surveyed said their organization was “still considering” whether to take advantage of the new limit, while 39% said they planned to do so for all employees, and 10% said they didn’t plan to do so.

FSA considerations for benefits leaders. 

One issue HR teams will need to take into account when deciding whether to increase their organization’s FSA contribution limit is what usage among highly compensated employees might look like.

US tax code bars employers from offering dependent care FSA plans that discriminate in favor of “highly compensated” employees; in 2025, this classification refers to employees who earn more than $160,000 a year.

Businesses must pass a series of tests to demonstrate their programs don’t favor these employees, and historically the “55% average benefits test” has been hardest for employers to clear, Rich Glass, a principal with Mercer’s law and policy group, said during an Aug. 7 webinar with clients. In order to pass, employers must show non-highly compensated employees receive 55% of the dependent care assistance benefits given to highly-compensated ones, on average. This may be difficult, particularly with a $7,500 contribution threshold, given highly compensated employees are more likely to make higher contributions to a dependent care FSA.

“A failure to test carries the risk of all [highly compensated employee] contributions becoming taxable,” Glass explained.

The Mercer data suggests employees are taking the potential effects of non-discrimination testing on their dependent care FSA programs into account, as 9% of respondents said they’re only planning on raising the annual contribution limit for certain employees—i.e., those who aren’t considered highly compensated.

“I suspect that that number may increase over time as more people digest this information,” said Dorian Smith, partner, national practice leader with Mercer’s law and policy group.

It’s worth noting that workers also have the option to claim the Child and Dependent Care Tax Credit (CDCTC) for child care expenses on their federal tax returns, and in 2026 this credit will also go up due to a change in the tax bill. Low-income families 

of up to 50% on $6,000 worth of expenses for two children, up from the previous 35%. Employees can’t claim the same expenses for both a dependent care FSA and the CDCTC, though.

Ultimately, employees’ decision on whether to take advantage of a dependent care FSA or the CDCTC is “highly individualized,” and likely to depend on workers’ gross income and the taxation rates where they reside, Glass said.

Childcare and work. Keyboard with children's alphabet blocks.

Companies weigh new $7,500 limit for dependent care FSAs 

The contribution limit for dependent care assistance programs will go up in 2026, but employers are considering how nondiscrimination tests may affect their programs.

Employers are weighing new $7,500 limit for dependent care FSAs 

A federal judge has given a reprieve to 60,000 migrants from Honduras, Nepal, and Nicaragua by extending their temporary protected status (TPS) through at least November 18.

, hampers the Trump administration’s efforts to revoke the migrants’ temporary protected status, which allows them to live and work legally in the US. While TPS was set to end on Aug. 5 for Nepal and Sept. 8 for Honduras and Nicaragua, migrants from both countries are now entitled to these protections until a Nov. 18 hearing is held on the merits of the case, at which point their protections may be extended again.

The decision comes as HR leaders are navigating a complex legal landscape for employing foreign-born workers.

Why a judge blocked the termination of TPS. 

The National TPS Alliance sued Homeland Security Secretary Kristi Noem on July 7, arguing her agency’s move to end TPS for these countries violated the Administrative Procedure Act, and was motivated by “racial animus.”

Judge Trina L. Thompson, a Biden appointee serving in the Northern District of California, wrote in her order that she believed the migrants were likely to succeed on the merits of their claims, and granted a request to postpone the planned termination of TPS for workers from these countries.

Thompson challenged DHS’s assertion that the TPS program allows criminals into the country, writing, “Their presence is not a crime. Rather, TPS holders already live in the United States and have contributed billions to the economy by legally working in jobs, paying taxes, and paying contributions into MediCare and Social Security.”

 responding to Thompson’s order, DHS Assistant Secretary Tricia McLaughlin said, “TPS was never meant to be a de facto asylum system,” but has been used that way for decades. The agency claimed the TPS program has been exploited by “violent criminals” who’ve been able to “hide behind a humanitarian designation.”

Thompson noted that most TPS holders work, and said ending their legal status would negatively affect economic activity, resulting “in a $1.4 billion loss to the United States economy.”

As a result of Thompson’s order, work authorization for TPS holders from Nepal, Honduras, and Nicaragua has been extended through Nov. 18.

Although efforts to end TPS for countries including Afghanistan and Haiti are still held up in the courts, the Supreme Court allowed the administration to end these protections for migrants from Venezuela in May. This decision 

 like Disney and Walmart to lay off workers whose legal status was set to end.

Employers are starting to pay closer attention to I-9 compliance in light of increased immigration enforcement at the federal level, HR Brew 

. Keeping an authorized worker on your payroll can result in fines reaching over $5,000, as well as criminal charges.

Some TPS holders may continue to work legally in US, for now

The Department of Homeland Security was set to end temporary protections for migrants from Honduras, Nepal, and Nicaragua, but a federal judge postponed the terminations.

Legislative lowdown: Judge postpones ending temporary protections for migrants living in US

Rhode Island Gov. Dan McKee signed the nation’s first menopause accommodation requirements into law earlier this summer.

Effective June 24, an employer operating in the Ocean State must protect and reasonably accommodate employees experiencing symptoms of menopause unless it can show evidence that providing such an accommodation would cause undue hardship to the business. The state becomes the first to protect women experiencing symptoms of menopause, which can include vasomotor symptoms such as hot flashes or night sweats, brain fog, migraines, and others.

“Menopause is a difficult and personal subject that has been stigmatized in this country, but as something that affects half our populations, it’s time we recognize it as a workforce issue—especially as our workforce ages along with our population,” said the bill’s sponsor, state Sen. Lori Urso (D), 

 about its passage. “The current lack of protections contributes to inadequate retirement savings and lost leadership opportunities for women, and poses an economic challenge for employers facing workforce shortages and the loss of experienced employees.”

The new measure updates the state’s Fair Employment Practices regulations to pregnancy accommodations, and makes it unlawful for an employer to deny reasonable accommodation requests to employees or job applicants experiencing symptoms related to pregnancy, childbirth, and now menopause, or medical needs such as accommodations related to lactation or hot flashes.

“With respect to pregnant employees, it is an unlawful employment practice here in Rhode Island to refuse to reasonably accommodate either an applicant for employment or an employee who is pregnant or has a pregnancy-related medical condition,” said Gregory Tumolo, shareholder and co-chair of the handbooks and policies practice group at Littler, a nationwide employment and labor law firm.

“You can’t require a pregnant employee to take a leave of absence if they don’t want to take one.”

It also has a notice requirement, he added.

The same framework for employees experiencing pregnancy or related medical conditions will now be applied to those experiencing symptoms related to menopause, though the measure does not explicitly outline reasonable accommodations.

“What the drafters of this law did—and I don’t think this is a very elegant solution to the problem—is they took the existing pregnancy law and they just tacked on menopause and menopause-related conditions,” Tumolo said. “So if you read the law, it actually doesn’t make a lot of sense because when it describes a non-exhaustive list of potential accommodations, they are all related to pregnancy.”

Tumolo said accommodations such as amending dress codes for looser or cooler clothing, allowing employees to use fans or adjust the temperature of their workstation, permitting breaks or securing a private space to manage vasomotor symptoms, may address employee needs.

“Folks need to realize that sometimes just having a conversation, asking someone what they need is how you get this process started,” he said. “Oftentimes, when an employee has a health condition [or] a disability, they are in the best possible position to know what they need and how they need it. So trust the employees.”

 Employers must post clear and accessible notices about these new protections in Rhode Island workplaces and make them clear by October 2025, at the time of hire, and also within 10 days of being notified of a menopause-related condition.

HR leaders should update their internal policies and onboarding materials, notify employees living in Rhode Island of the new law, train managers to take menopause accommodations as seriously as pregnancy, and outline how to handle accommodation requests, according to a 

“In light of this law, maybe you want to create an employee resource group for folks that are experiencing menopause, or maybe you want to offer employee assistance program resources to folks that are struggling emotionally with what’s happening to them and want to talk to someone,” Tumolo said. “There’s more than just an accommodation piece to this. If you want to make your workplace menopause friendly.”

Some HR leaders are already ahead of lawmakers when it comes to supporting employees experiencing menopausal symptoms. 

 that in 2025, 18% of companies will or plan to provide menopause benefits to employees, up from 15% in 2024. There are even 

 businesses for supporting employees experiencing these symptoms.

“I suspect that many other states will realize that this is a gap in their fair employment laws and a gap in their protections, and will want to expand the protections in this way,” Tumolo said. “I would envision in the next four to five years, there will be probably other states that are doing this.”