Namely

Beyond the usual policies, companies must foster trust and accountability through training, communication, and consistent enforcement. 

 offers the tech, services and resources—including a 

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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

hr-brew.com

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.

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.”

Rhode Island enacts nation’s first menopause accommodation law

The state will consider menopause accommodations like pregnancy-related accommodations.

The Department of Labor (DOL) is expanding a series of programs that allow employers to report and correct workplace violations to avoid formal investigations or lawsuits.

The Biden administration had discontinued one such program, which focuses on payroll violations, over concerns it violated workers’ rights and disincentivized employers from following the law. That program will now be revived, giving employers the opportunity to resolve violations under both the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA).

Why the Trump administration is encouraging self-audits. 

The DOL highlighted six agencies under its direction that are launching, continuing, or expanding self-audit programs, including the Employee Benefits Security Administration, the Occupational Safety and Health Administration (OSHA), and the Wage and Hour Division (WHD).

 issued regarding the agency’s self-audit programs, Deputy Secretary of Labor Keith Sonderling said the programs were intended to give employers the tools “to correct potential violations proactively.” The practice of self-auditing, he added, is “one of the most effective ways to build a culture of compliance and trust.”

Payroll Audit Independent Determination (PAID)

 program, which launched in 2018, allows employers to identify potential minimum wage, overtime, and leave violations. If they report violations to the WHD and correct them by paying workers back wages, for example, they may avoid formal investigations or litigation, according to the DOL.

When the Biden administration discontinued the PAID program in January 2021, Wage and Hour Division Principal Deputy Administrator Jessica Looman cited concerns that the program barred workers from suing their employers over such violations. “The Payroll Audit Independent Determination program deprived workers of their rights and put employers that play by the rules at a disadvantage,” she said 

The revived PAID program allows employers to report and correct a broader range of violations, as it applies to both the FLSA and

the FMLA (the latter wasn’t previously covered).

Only employers without a history of FLSA or FMLA violations within the last three years may participate in the program, 

. They also can’t be subject to any investigations or lawsuits alleging violations of these laws, and must inform the WHD of any complaints they’ve received from workers regarding potential violations. Businesses participating in the PAID program must pay back wages owed to their workers within 15 days after receiving a summary of unpaid wages from the DOL, and also provide proof they have done so to avoid a formal investigation or litigation.

While this program provides an opportunity for HR teams to get ahead of potential payroll or leave violations at their workplaces, it’s important to note that it doesn’t supersede state or local laws. In states where the statute of limitations for wage claims is longer—such as New York or Massachussetts—businesses could open themselves up to lawsuits by disclosing violations to the federal government, Fisher Phillips attorneys 

This marks the latest move by the DOL to ostensibly encourage compliance while easing up on penalties for employers. In June, the agency announced it 

 its opinion letter program to guide employers on compliance, and in July the DOL said it would make it easier for small businesses 

 it will no longer seek liquidated damages in settlements concerning wage or overtime violations under the FLSA.

Trump DOL revives self-audit program for wage violations

A program for correcting wage-and-hour violations is being revived after it was discontinued by the Biden administration. 

Legislative lowdown: Labor Department expands programs allowing employers to avoid investigations

 a Biden-era opinion letter on July 21 that had indicated a racial equity program proposed by Citibank would be lawful.

A program to pay the investment fees for “diverse asset managers” was never implemented, according to Citi, but the DOL nevertheless cautioned the bank against carrying it out.

The DOL’s decision to rescind an advisory opinion that was favorable of the proposed program shows how the administration is scrutinizing private firms for “illegal” DEI practices.

Why the DOL targeted Citi’s DEI efforts. 

, issued by the DOL in 2023, referenced a racial equity program that was part of Citi’s broader efforts to close the racial wealth gap.

As part of the racial equity program, Citi would pay all or part of the investment management fees for “diverse managers” retained by employee benefit plans—such as defined benefit or defined contribution plans—sponsored by the bank. The opinion noted that asset managers from diverse backgrounds tend to be underrepresented in the market, even though they “perform as well or better than median performers.”

Covering fees for managers from underrepresented backgrounds, the bank asserted, would “help address such systematic disadvantages in the context of Citi’s own employee benefit plans,” a DOL official with the Biden administration wrote.

While the Biden-era DOL indicated that such a program would be legal, and offered insight on how the bank could act as a responsible fiduciary to that end, the agency now asserts “its allocation of benefits on the basis of race clearly and unambiguously violates the civil rights laws,” according to the letter issued July 21.

A separate DOL official cited a number of legal cases, including the 2023 Supreme Court ruling 

Ames v. Ohio Department of Youth Services 

allowing a reverse discrimination case to proceed, when explaining why the agency believed the Citi program was illegal.

“Citi should take immediate action to end all illegal activity within its Racial Equity Program and any other initiative, plan, program, or scheme it operates under the banner of diversity, equity, and inclusion,” the official wrote.

What this means for DEI in the private sector. 

Citi told HR Brew via email that it never implemented the hypothetical program called out by the DOL, and doesn’t have plans to do so.

Nevertheless, the July 21 letter seems to indicate what types of programs or practices the Trump administration may scrutinize as it seeks to combat “illegal” DEI in the public and private sectors. A Jan. 21 executive order 

 calls on measures to encourage private-sector employers to end “illegal DEI discrimination and preferences,” and a number of companies 

 on their DEI efforts in light of this scrutiny.

The order also directed federal agencies to “identify up to nine potential civil compliance investigations” related to DEI programs at publicly traded companies, large nonprofits, or universities, though the DOL didn’t say whether it’s investigating Citi as a result of this program.

 for rebranding their efforts to avoid legal issues in a Senate Judiciary Committee hearing last week, HR Brew recently reported. But Sen. Mazie Hirono, a Democrat, noted the Constitution “does not bar diversity, equity, and inclusion,” adding, “programming relating to diversity is not illegal just because Donald Trump says so."

Labor Department targets DEI at Citibank with opinion letter

 Citi says it never implemented a program to reward asset managers from underrepresented backgrounds, but the DOL still warned the bank to “end all illegal activity” tied to it.