📅 2026 Update: Recent Developments in Payroll Law

Since the original article was written, there have been important changes in payroll law that impact businesses. These updates include shifts in salary thresholds, pay transparency laws, and workplace harassment guidelines. The older article continues further down this page, offering foundational insights into payroll law.

⚖️ Overtime Salary Thresholds

In April 2024, a proposal aimed to raise the overtime salary exemption from $684 to $844 per week, effective July 1, 2024, and further to $1,128 per week starting January 1, 2025. However, on November 15, 2024, a federal court reinstated the 2019 threshold of $684 per week. Employers must ensure their payroll systems comply with this current threshold.

💵 Minimum Wage Updates

California's minimum wage saw an increase to $16.90 per hour on January 1, 2026, up from $16.50 in 2025. This is a notable change, as it affects a wide range of employers and employees across the state. Keeping abreast of minimum wage changes is essential for businesses to avoid legal issues.

📊 Pay Transparency Laws

By the end of 2025, more than 25 states enacted pay transparency mandates, a significant increase from 12 states at the start of the year. Employers in these states need to update job postings and pay structures to comply with local laws about salary disclosures.

🛡️ Harassment Guidance Changes

In January 2026, the Equal Employment Opportunity Commission (EEOC) rescinded its 2024 Enforcement Guidance on Harassment in the Workplace. This change emphasizes that while the guidance has been revoked, the core anti-harassment laws remain unchanged. Employers must still prioritize a respectful workplace environment.

📌 Key Points to Remember

  • ⚖️ The overtime salary threshold is currently $684 per week.
  • 💵 California's minimum wage is $16.90 per hour as of January 1, 2026.
  • 📊 Over 25 states now have pay transparency laws.
  • 🛡️ The EEOC's 2024 harassment guidance has been rescinded, but anti-harassment laws still apply.
  • 🔍 Employers should continuously monitor changes in payroll laws to ensure compliance.

💡 Tips for Navigating Payroll Laws

Review your unique situation with your attorney to ensure compliance with payroll laws.

📑 Understand Overtime Rules

Employers must ensure that employees earning at least $684 per week are eligible for overtime exemptions under the Fair Labor Standards Act (FLSA). Staying updated on any changes is crucial for compliance.

🌟 Stay Informed on Minimum Wage

With California's minimum wage now at $16.90 per hour, employers should regularly assess their payroll to ensure that they meet or exceed this minimum.

🛠️ Prepare for Pay Transparency

Employers in states with pay transparency laws should revise job postings and compensation structures. This may involve updating salary ranges and ensuring that pay practices align with state requirements.

🧑‍🤝‍🧑 Foster a Respectful Workplace

Even with changes in harassment guidance, employers must comply with existing anti-harassment laws. Implementing training programs can help maintain a respectful workplace.

📈 Monitor Legislative Changes

Continue to track changes in payroll-related laws at both federal and state levels. Being proactive can prevent potential legal issues.

🏆 Payroll Services Ranked by User Reviews (2026)

This section highlights various services that assist with payroll and legal compliance, relevant to this article's topic. The order follows Trustpilot data confirmed in October 2026. Note that star ratings can change over time, and unhappy customers are often more vocal, affecting overall scores.

🥇 1. Rocket Lawyer

Rocket Lawyer has been rated 4.5. It is known for online legal document creation, legal advice subscriptions, and business incorporation services. However, some users find its subscription model may not suit everyone, and navigation of the platform can be complex.

🥈 2. LegalShield

LegalShield holds a score of 4.4. It is recognized for its legal subscription services and access to a network of attorneys. Despite its benefits, some users report difficulties in reaching their assigned attorneys, leading to occasional delays in response times.

🥉 3. Bizee

Bizee averages 4.8. The service is well-known for business formation services, registered agent services, and compliance assistance. However, users have reported issues with the platform's user interface and occasional delays in processing times.

4️⃣ LegalZoom

LegalZoom has been rated 4.6. It is known for its business formation services, legal document preparation, and registered agent services. Some users have experienced delays in processing times, along with issues regarding customer support responsiveness.

🆓 Free Government and Nonprofit Help

The U.S. Department of Labor offers a Small Entity Compliance Guide to help employers understand and comply with FLSA exemptions. State labor departments and nonprofit organizations also provide guidance on employment laws, including pay transparency and minimum wage requirements.

🔎 Factors to Compare When Choosing Payroll Services

  • 📋 Service offerings related to payroll compliance.
  • 💬 User reviews and overall satisfaction ratings.
  • ⏳ Processing times for service requests.
  • 💰 Cost structures and potential hidden fees.
  • 📞 Customer support availability and responsiveness.

❓ Frequently Asked Questions

🧐 What is the current overtime salary threshold?

The current overtime salary threshold is $684 per week, as reinstated by the court ruling in November 2024.

📜 How has the minimum wage changed in California?

As of January 1, 2026, California's minimum wage increased to $16.90 per hour from $16.50 in 2025.

📅 What are pay transparency laws?

Pay transparency laws require employers to disclose salary ranges and compensation structures in job postings. More than 25 states have implemented such mandates.

📊 What should employers do about harassment training?

Employers should stay informed about federal and state guidelines on workplace harassment. Implementing effective training programs is crucial for compliance.

⚖️ What should I know about the EEOC's harassment guidance?

In January 2026, the EEOC rescinded its 2024 Enforcement Guidance on Harassment in the Workplace. This change does not alter existing anti-harassment laws.

📈 How can I stay updated on payroll law changes?

Employers should regularly monitor changes in payroll-related laws at both federal and state levels to ensure ongoing compliance.

⚖️ Recent Cases Impacting Payroll Laws

Recent court rulings have influenced important aspects of payroll laws, particularly concerning overtime salary thresholds. These decisions are crucial for employers to understand to ensure compliance with current regulations.

For more context on how these rulings may affect your business, check out more rulings on the news page.

End of October 2026 Update





Payroll is the total of financial obligations to employees in terms of salary, bonuses and deductions for services such as transit reimbursement and health insurance.  The effective functioning of payroll ensures that a business remains running optimally, which necessitates the hiring of additional personnel to perform payroll services in larger companies to manage payroll and ensure its timely and accurate payment.  Without effective payroll management, employers can be prone to mistakes, noncompliance with the law and a host of legal liability issues.  The employer is mandated by law to keep accurate records of employee payroll as well as make the appropriate tax contributions.



Understanding the Law Behind Payroll

What are payroll taxes?

Payroll taxes are deductions made by the employer on behalf of the government to fund entitlement programs as well as income tax.  Payroll services personnel may be needed to ensure compliance with state and federal laws on tax withholding laws.  Taxes paid from payroll into Social Security and Medicare is matched by employers.  Given that payroll taxes are usually an intersection of federal, state and local law, compliance can be difficult.  Often there are a number of deductions for state disability, unemployment insurance as well as school and other programs that are held in trust.  It is the responsibility of the employer to be in compliance with tax laws and hand over the withheld taxes to the government.

Employers are responsible for the following payroll taxes:

Social Security (6.2%)

Medicare (1.45% of wages)

Federal unemployment taxes

State unemployment taxes

Under the Federal Insurance Contributions Act half of contributions to entitlement programs are paid by the employer and the other half by the employee.



What are payroll laws?

There are a number of payroll laws and some laws may vary by state:

Minimum wage – although there is a federal minimum wage law, some states, like New York will require an even higher minimum age.  

Overtime – the Fair Labor Standards Act mandates that overtime pay must be made when an employee exceeds forty hours worked in a week.  Any subsequent hours worked must be compensated with “time and a half” pay.  Exceptions include domestic workers that live with the employer who have a higher threshold for overtime.  Certain other employees are not eligible for overtime such as salespersons, computer professionals and certain administrative or professional workers.  A payroll or labor lawyer will be able to determine which employees are exempt.

Payroll tax – employers are obligated by federal law to withhold the above mentioned payroll taxes

Frequency of pay – employees are generally paid biweekly, but other arrangements include seasonal, daily, monthly and in some rare cases, semiannually or annually.  Payroll taxes will be scaled to match this payroll period.



What are payroll services?

For smaller businesses that cannot afford to have full time personnel managing payroll, specialized payroll services exist with payroll software and trained professionals that keep track of payroll laws and changes that affect how payroll is disbursed to employees.  Some payroll services may provide further services typically provided by human resources personnel such as tracking benefits plans.  Payroll services offer a number of ways to disburse salary, usually through checks sent to the employee, but also newer options, such as direct deposit.  Payroll services can also provide pay stubs to employees, although this is not required by law.  Pay stubs are useful for an employee to keep track of the taxes withheld as well as earnings to date.



What is payroll software?

Small businesses may decide to use payroll software to automate their payroll needs.  This software can calculate deductions and create paychecks as well as manage benefits plans.  There may be issues with keeping the software current, which will lead many payroll software makers to offer live support, automatic updates, or ancillary payroll services to augment the payroll software made available to small businesses.