IRS Updates

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OBBB Qualified Tip Rule is Finalized

APPLIES TO

All Employers with Employees in Traditionally Tipped Occupations

EFFECTIVE

JUN 12, 2026

QUESTIONS?

Contact HR On-Call

(888) 378-2456

 

Quick Look

  • The IRS finalized a rule defining qualified tips for purposes of the tip income tax deduction under the One, Big, Beautiful Bill Act.

Discussion

The One, Big, Beautiful Bill (OBBB) Act established a tax deduction for qualified tips under Section 224 of the Internal Revenue Code. The Internal Revenue Service (IRS) has now issued a final rule defining what constitutes “qualified tips” for purposes of that deduction.

 

As background, the deduction applies to qualified tips received during the tax year, provided those tips are properly reported on an information return, such as a W-2 or 1099. The deduction is capped at $25,000 per year regardless of filing status and is phased out for higher earners: it is reduced by $100 for every $1,000 of modified adjusted gross income (MAGI) above $150,000 for single filers or $300,000 for joint filers. Married taxpayers must file jointly to claim the deduction, and the SSN of the tip recipient must be included on the return.

 

Definition of a “Qualified Tip.” The final rule confirms that qualified tips must be cash tips (including cash, check, credit/debit card, gift card, casino chips, foreign currency, or mobile payments denominated in cash, but not digital assets or non-cash items like tickets or meals) received in an occupation that customarily and regularly received tips, as determined based on whether the tips were received in that occupation on or before December 31, 2024.

 

Critically, a qualified tip must be a voluntary, non-negotiated amount that the customer determines freely, with a genuine option to pay nothing. This means mandatory service charges, automatic gratuities for large parties, and contractually required gratuities are not qualified tips, though any voluntary amount added above such charges can qualify. Tips from illegal activity, prostitution, or pornography are excluded, as are tips received by managers or supervisors through tip pools.

 

Anti-Abuse Rules and Trade/Business Limits. The final rule emphasizes that an amount is not a qualified tip if, based on all relevant facts and circumstances, it represents a recharacterization of wages or payments for goods or services. Indicators of improper recharacterization may include: a reduction in the charge for services coinciding with a corresponding increase in the reported tip amount; or a significant shift in historical tipping or payment practices between the customer and the tip recipient. There is also an irrebuttable presumption that amounts are not qualified tips when the payor is the tip recipient’s own employer, or when the tip recipient owns 5% or more of the paying entity.

 

For self-employed individuals, the deduction is further limited to the net income of the trade or business, meaning tips cannot create or increase a business loss. Qualified tips generally must be separately reported on information returns, though a transition rule for tax year 2025 allows them to be included in aggregate reported amounts.

 

Eligible Occupations. Only tips earned in occupations listed on the Treasury Tipped Occupation Code (TTOC) table qualify for the deduction. The TTOC spans eight broad categories:

 

  • Beverage and Food Service(e.g., bartenders, waitstaff, chefs, baristas);
  • Entertainment and Events(e.g., gambling dealers, musicians, DJs, digital content creators, ushers);
  • Hospitality and Guest Services(e.g., bellhops, concierges, hotel desk clerks, housekeepers);
  • Home Services(e.g., handymen, landscapers, electricians, plumbers, HVAC technicians, locksmiths);
  • Personal Services(e.g., caregivers, event planners, photographers, pet groomers, tutors, nannies);
  • Personal Appearance and Wellness(e.g., hairstylists, massage therapists, manicurists, trainers, tattoo artists, tailors);
  • Recreation and Instruction(e.g., golf caddies, tour guides, ski/tennis instructors); and
  • Transportation and Delivery(e.g., valets, rideshare drivers, shuttle drivers, delivery workers, movers).

 

In response to many public comments, the IRS made only minor modifications to the TTOC list between the proposed and final rule. Notably, the IRS did not remove any occupations from the preliminary list, but it did add three new occupations: Visual Artists (TTOC 509), Floral Designers (TTOC 510), and Gas Pump Attendants (TTOC 810). It also slightly broadened three existing categories: “Food Servers, Non-restaurant” became “Food and Beverage Servers, Non-restaurant,” “Pet Caretakers” became “Pet and Show Animal Caretakers,” and “Eyebrow Threading and Waxing Technicians” became “Eyebrow and Eyelash Technicians.” The IRS rejected requests to add several other occupations to the list, including chiropractors, accountants, tax preparers, concert merchandise sellers, and legal professionals offering sliding-scale services.

 

The IRS also added several illustrative examples to the final rule, including banquet staff as an example of Wait Staff (TTOC 102), clergy as an example of Event Officiants (TTOC 505), and app- and platform-based delivery persons as an example of Goods Delivery People (TTOC 804). Employers should note that while the TTOC list of qualifying occupations is exhaustive, the illustrative examples are not, and accordingly, other jobs may still fall within a listed occupation category even if not explicitly named.

 

It is also worth noting that the IRS has distinguished between qualifying occupations under the OBBB and tipped occupations under the Fair Labor Standards Act (FLSA). The IRS emphasized that “the inclusion of occupations as tipped occupations under [the OBBB] has no bearing or effect on what occupations are considered tipped for purposes of the FLSA.” In practical terms, this means that back-of-house employees (e.g., dishwashers and cooks) appear on the TTOC qualifying occupation list and may be eligible for the deduction, even though they do not qualify for the FLSA tip credit. Employers should be careful not to conflate the two frameworks.

 

Employees in Multiple Occupations. The Final Rule explained that when an employee works in two different occupations for the same employer, but only one of those occupations qualifies for the deduction, only tips received in that occupation may be claimed as qualified tips. For example, if a restaurant manager (a non-qualifying occupation) occasionally performs duties as wait staff (a qualifying occupation), they may claim the deduction for tips received directly from customers for services they directly and solely provide in their capacity as waitstaff. A tip received by that same manager in their capacity as a manager would not qualify.

 

Sunset. The deduction applies to tax years beginning after December 31, 2024, and sunsets after December 31, 2028. Employers in affected industries should note the sunset date when planning for future payroll and reporting practices.

 

Action Items

  1. Review the final rule here.
  2. Identify and track qualified tips for tax reporting.
  3. Have appropriate personnel trained on the requirements.

 

 

IRS Launches Whistleblower Alerts

On April 17, 2026, the IRS issued its first Whistleblower Alert flagging the misuse, diversion, or fraudulent use of federal funds by tax-exempt organizations, individuals, and businesses as a high-priority area. Whistleblower Alerts are intended to highlight high-risk areas of noncompliance and encourage individuals with firsthand knowledge to share credible, timely information with the IRS. Individuals who report specific, credible, and timely information about suspected tax fraud or misconduct may be eligible for a monetary award of up to 30% of the proceeds collected by the IRS based on their information. Whistleblowers may remain anonymous, but must identify themselves to be considered for a monetary award. The IRS Whistleblower Office has indicated it intends to issue additional alerts as other high-risk areas emerge.

 

IRS Publishes Updated FAQs on Educational Assistance Programs

On April 20, 2026, the IRS updated its Frequently Asked Questions (FAQs) on Educational Assistance Programs under section 127 of the Internal Revenue Code. The revised FAQs reflect several notable changes driven by the OBBB, including:

 

  • Permanent Benefit.The prior version of the FAQs treated employer payments of principal or interest on employees’ qualified education loans as a temporary benefit set to expire January 1, 2026. That expiration has been removed, and the benefit is now a permanent feature of Section 127 programs.
  • Exclusion Limits.Beginning with taxable years after 2026, the $5,250 annual cap on tax-free educational assistance will be adjusted for cost-of-living increases.
  • Disclosure of Plan Terms.Previously, employers were only required to inform employees whether a Section 127 plan existed. Employers are now required to also communicate the terms of the plan to employees.
  • Educator Expenses. Educator expenses are now also deductible as itemized deductions starting in 2026, in addition to the existing above-the-line deduction.

 

Employers with Section 127 educational assistance programs should review their plan documents and employee communications in light of these updates.

 

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

DOL Updates

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DOL Proposes New Joint Employer Standard

APPLIES TO

All Employers

EFFECTIVE

TBD

QUESTIONS?

Contact HR On-Call

(888) 378-2456

 

Quick Look

  • The DOL has proposed a new four-factor test for determining joint employer status under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Worker Protection Act.
  • Under the proposed rule, control that is actually exercised is weighted more heavily than control that is merely reserved but rarely or never exercised.

Discussion

On April 22, 2026, the U.S. Department of Labor (DOL) published a proposed rule that would establish a new standard for determining when two or more employers may be jointly liable for violations of the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

 

Under the proposed rule, joint employer status would be determined by evaluating whether a potential joint employer:

 

  • Hires or fires the employee;
  • Supervises and controls the employee’s work schedule or conditions of employment to a substantial degree;
  • Determines the employee’s rate and method of payment; and
  • Maintains the employee’s employment records.

 

The DOL included several practical examples in the proposal to illustrate how these factors should be applied. In one example, an office park company contracts with a janitorial services company to clean its building after hours. The office park agrees to pay the janitorial company a fixed fee, reserves the right to supervise the janitorial employees, but does not set their pay rates or individual schedules and does not actually exercise its supervisory authority. Under the proposed rule, the office park would not be a joint employer because it does not hire or fire the janitorial employees, determine their rate or method of payment, or exercise actual control over their conditions of employment.

 

 

 

 

Relationship to Prior Joint Employer Standards

 

The proposed rule is not entirely new. The Trump administration issued a nearly identical joint employment rule in 2020, which was repealed by the Biden administration in 2021, leaving a regulatory gap that was subsequently filled by court decisions. However, the 2026 proposal differs from the 2020 version in two key respects.

 

First, while the 2020 rule required that an employer actually exercise one or more of the four factors to qualify as a joint employer, the 2026 proposal softens this requirement, instead providing that control that is actually exercised carries more weight than control that is merely reserved but rarely or never exercised. Second, the 2026 proposal would replace the current FMLA joint employment regulation with a reference to the new FLSA joint employment analysis, creating a unified standard across the three covered statutes.

 

It is also important to note that a separate joint employment standard applies under the National Labor Relations Act (NLRA) for labor relations purposes. That standard is more stringent than the proposed FLSA/FMLA/MSPA standard, meaning that unionized employers or employers facing organizing activity could be found to be joint employers under the NLRA even if they would not qualify as joint employers under the DOL’s proposed rule.

 

The DOL’s comment period for the proposed rule is set to close on June 22, 2026, after which the DOL will consider feedback and revise the proposal as necessary.

 

Action Items

  1. Continue to monitor the rulemaking process.
  2. Review potential joint employer relationships with legal counsel.

 

 

DOL Proposes Regulations to Clarify ERISA Plan Fiduciary Duties  

On April 7, 2026, the DOL published proposed regulations intended to clarify the duties of ERISA plan fiduciaries when selecting alternative assets as designated investment alternatives in participant-directed individual account plans, including 401(k) and 403(b) plans. “Alternative assets” include, but are not limited to, private equity, real estate, digital assets, commodities, and infrastructure investments. The proposed regulations create “safe harbor” conditions and propose that courts give significant deference to fiduciary determinations. However, they do not eliminate the underlying ERISA obligations to act prudently in selecting and monitoring investment alternatives, ensure suitability for plan participants, and address liquidity risks associated with alternative assets. Even so, and in light of the Supreme Court’s 2024 Loper Bright decision eliminating Chevron deference, there is no guarantee that courts will defer to either the DOL’s interpretation of ERISA or a fiduciary’s reliance on the safe harbor. Plan fiduciaries should consult ERISA counsel on these regulatory developments and the ongoing obligations associated with plan investment decisions.

 

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

Other Federal Agency Updates

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Discussion

EEOC Reports on Fiscal Year 2025 Performance

On April 6, 2026, the U.S. Equal Employment Opportunity Commission (EEOC) announced that in fiscal year 2025, the agency secured $660 million for 17,680 victims of employment discrimination, representing its third-highest recovery in recent history. This included a record-breaking $528 million through pre-litigation enforcement (up 12% from FY2024), $27 million through litigation, and $104.6 million for federal employees and applicants. Notable gains included a 24% increase in conciliation recoveries ($52.5 million) and a roughly 115% jump in monetary benefits from systemic investigations ($55 million). The EEOC also handled higher public demand more efficiently, responding to nearly 270,000 inquiries (up 9%), resolving 90,743 discrimination charges (up 4%), reducing private-sector charge inventory by 4%, and boosting federal sector appellate resolutions by 67% compared to the prior year. This report highlights the EEOC’s active enforcement efforts, which are expected to continue for the current fiscal year.

 

Additional Guidance Regarding DEI Discrimination by Federal Contractors

Following Executive Order 14398 (EO 14398), issued March 26, 2026, which required federal agencies to implement certain contract requirements for federal contractors and subcontractors within 30 days, the Federal Acquisition Regulatory Council (FAR Council) issued a memorandum on April 17, 2026, providing further guidance. Specifically, the guidance defines “racially discriminatory DEI activities” to mean disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources. It also defined “program participation” and provided the language required to be incorporated into new qualifying federal contracts by April 24, 2026, and existing contracts by July 24, 2026. Employers should note that the EO is currently being challenged in a Maryland federal district court.

 

DEA Issues Final Order Rescheduling Certain Marijuana Products

Effective April 22, 2026, a Drug Enforcement Administration (DEA) final order moves two categories of marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA): (1) FDA-approved drug products containing marijuana, marijuana extracts, or naturally derived delta-9-THC, and (2) marijuana (in any form) covered by a qualifying state medical marijuana license. Importantly, the changed scheduling does not impact employers’ ability to maintain a drug-free workplace. However, this may impact potential protections for medical marijuana card holders under disability accommodation laws where there is no use impairment while working. Employers should review medical marijuana accommodation requests with legal counsel for compliance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

Federal Court Updates

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Discussion

Third Circuit: Pension Fund Delay in Seeking Withdrawal Liability Bars Recovery

On March 3, 2026, in RTI Restoration Techs., Inc. v. International Painters & Allied Trades Industry Pension Fund, the Third Circuit affirmed summary judgment for two companies that challenged a union pension fund’s effort to collect withdrawal liability under the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), eight years after the original contributing employer went out of business. The court held that the fund’s failure to notify the companies of their withdrawal liability “as soon as practicable,” as required under the MPPAA, was a defense that could be raised in federal court rather than exclusively through arbitration. The companies’ only connection to the original employer was through a shared officer, who had served at various times as a business partner, employee, and part-owner of the companies. Employers with any historical or indirect connections to multiemployer pension funds should consult with ERISA counsel to evaluate potential withdrawal liability exposure, particularly where successor or affiliate relationships may exist.

 

Fourth Circuit: General Control Does Not Create Joint Employment

On March 3, 2026, in Hoffman v. Inova Health Care Services, the Fourth Circuit affirmed dismissal of Title VII, ADA, and Virginia Human Rights Act claims brought by nurse anesthetists employed by a medical group against the hospital system at which they practiced, finding that the hospital system was not their joint employer. Applying the nine-factor Butler test for joint employment, the court found the plaintiffs failed to satisfy any of the factors, noting in particular that a hospital’s general authority over the administration of medical services is not a reliable indicator of an employer-employee relationship. The court similarly found that the hospital’s provision of equipment and facilities, and its delivery of compliance-related training on matters such as harassment and patient privacy, were standard practice in a hospital setting and not indicators of joint employment. Employers should note that the standards applicable to joint employer relationships may be further clarified once the DOL finalizes its proposed joint employer rule.

 

Tenth Circuit: Similarly Situated Requires More than Same Supervisor

On March 2, 2026, in Sousa v. Chipotle Services, LLC, the Tenth Circuit affirmed summary judgment for the employer in an age discrimination case where the plaintiff, a restaurant area manager terminated for pest and cleanliness issues at locations he oversaw, argued that younger employees supervised by the same decision-maker were not terminated for similar problems at their restaurants. The court held that a plaintiff asserting disparate treatment must produce sufficient evidence that the proposed comparators were similarly situated, not merely that they shared the same supervisor. In this case, the plaintiff failed to present evidence that the conditions at younger employees’ restaurants were comparable to those at his own. The court also rejected the plaintiff’s argument that the prior termination of another older employee for similar reasons constituted additional evidence of age discrimination, again finding insufficient evidence of comparable circumstances. This ruling emphasizes the importance of treating all employees consistently and documenting performance-related issues, especially when they are the basis for a termination decision.

 

Eleventh Circuit: Differing Disciplinary Histories Defeat Comparator Argument

On March 19, 2026, in Johnson v. Miami-Dade County, the Eleventh Circuit affirmed summary judgment for the employer in a race discrimination and retaliation case brought by a Black police officer who was terminated following five disciplinary actions over a two-and-a-half-year period. Applying the similarly situated standard established in Lewis v. City of Union City, the court found that the plaintiff’s proposed comparators had materially different disciplinary records and therefore did not qualify as similarly situated employees in all material respects, which defeated the discrimination claim. The court also rejected the retaliation claim, finding that the shortest interval between the plaintiff’s EEOC complaint filings and subsequent disciplinary actions, approximately two months, was insufficient on its own to establish a causal connection between the protected activity and the adverse action. This case reinforces the importance of maintaining consistent and well-documented disciplinary procedures, as courts will scrutinize whether employees facing adverse actions are treated comparably to others with similar disciplinary histories.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

Alabama

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Alabama: Legislative Updates

APPLIES TO

As Indicated

EFFECTIVE

As Indicated

QUESTIONS?

Contact HR On-Call

(888) 378-2456

 

Quick Look

  • The TRAIN Act creates a state income tax credit for employers that enter into a memorandum of understanding with an eligible educational institution that meets certain requirements.
  • Individuals may take an automatic $1,000 state tax deduction for qualified overtime compensation.
  • Employers may receive a tax credit for offering organ donor paid leave.
  • The new Alabama Personal Data Protection Act creates a comprehensive data privacy framework governing how covered businesses collect, process, and sell consumer’s personal data.

Discussion

The Alabama legislature recently passed several laws impacting employers. Key aspects of the bills are summarized below.

 

New TRAIN Act. Effective October 1, 2026, HB 517 establishes Alabama’s Talent Readiness and Industry Needs (TRAIN) Act, which creates a state income tax credit for employers that enter into a memorandum of understanding with an eligible educational institution and assign qualified employees to teaching roles for a minimum of 300 hours, while continuing to pay the employees’ full salary and benefits during the assignment. The credit is based on the portion of salary paid during the teaching assignment, subject to a statewide annual cap of $10 million, an individual taxpayer cap of $250,000, and a limit that credits may not reduce an employer’s tax liability by more than 50% (with unused credits carrying forward for up to five years).

 

Overtime Tax Deduction. Under HB 527, and for tax years from January 1, 2026 to December 31, 2028, individuals may take a $1,000 state income tax deduction on qualified overtime compensation received during the taxable year. Qualified overtime compensation is defined consistent with federal law. Deductions may be claimed regardless of whether the taxpayer itemizes deductions.

 

Tax Credit for Employers that Offer Organ Donor Paid Leave. Effective for tax years beginning January 1, 2027 through December 31, 2031, Alabama’s HB 361 creates a state income tax credit for private employers that adopt a formal written policy providing at least 15 days of paid leave for employees who donate all or part of an organ. The credit equals 25% of the gross compensation paid to the employee during the leave period, up to $2,000 per tax year. Unused credits may be carried forward for up to three succeeding tax years if the credit exceeds the employer’s tax liability.

 

New Consumer Privacy Law. Effective May 1, 2027, HB 351 establishes the Alabama Personal Data Protection Act (APDPA), creating a comprehensive data privacy framework governing how covered businesses collect, process, and sell consumers’ personal data. The law grants consumers new rights, including the right to access, correct, delete, and opt out of the sale of their personal data, and imposes corresponding obligations on covered businesses. While the APDPA does not impose employment-specific obligations on employers and expressly excludes data processed in an employment or commercial context from its scope, businesses operating in Alabama that meet certain thresholds should be aware of its requirements. The law generally applies to businesses that operate in Alabama or target Alabama residents and either process the personal data of more than 25,000 consumers or derive more than 25% of gross revenue from the sale of personal data. Notably, businesses with fewer than 500 employees that do not sell personal data are exempt.

 

Action Items

  1. Consider implementing organ donor paid leave to take advantage of a tax credit.
  2. Review the TRAIN Act and organ donor leave tax credit opportunities with a tax advisor.
  3. Review compliance obligations under new consumer privacy law, if applicable.

 

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

Colorado

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Discussion

Colorado: AI Anti-Discrimination Law Blocked Pending Further Review

In 2024, Colorado passed a first-of-its-kind AI anti-discrimination law, which was set to take effect on June 30, 2026. On April 27, 2026, a federal court issued a restraining order to temporarily block enforcement of the law, following a lawsuit filed by xAI and the U.S. Department of Justice (DOJ) that challenged Colorado’s law on First Amendment, Commerce Clause, and Equal Protection grounds. Although the court did not weigh in on the substantive arguments asserted by xAI or the DOJ, the court’s order protects employers from investigations or penalties for any alleged violations until the court issues a final ruling on whether the law should be permanently enjoined. The court has directed the plaintiffs to file a more comprehensive motion to block the law within 28 days after the legislature passes amended legislation or the state Attorney General issues final implementing regulations. This development comes as part of ongoing scrutiny of the law, including a previous proposal to substantially rewrite the law and push the effective date back to January 1, 2027. Colorado employers currently have no immediate compliance obligations under the law, but should monitor the legislative session and court proceedings closely, as the law’s ultimate scope, requirements, and effective date remain in flux.

 

Colorado: Changes to Overtime Rules for Agricultural Workers

As of January 1, 2027, SB 121 requires all covered agricultural workers to be paid overtime for hours worked over 56 in a week. This represents a change from prior thresholds, under which overtime began after 48 hours for most farm work and 56 hours only during peak seasonal periods. Only employees who are engaged in the range production of livestock, decision-making managers, or family members of owners are exempt from this requirement. Employers that fail to comply may be subject to a 10% penalty increase, plus additional penalties of up to $40,000 for willful violations.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

Florida

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Discussion

Florida: Local Governments Prohibited from Funding or Implementing DEI Initiatives

Effective January 1, 2027, Florida’s SB 1134 prohibits local governments from establishing or maintaining DEI offices, staff, or programs; bars the use of taxpayer funds for DEI-related initiatives, training, or engagement of third-party DEI contractors; prohibits local governments from passing resolutions or policies endorsing DEI; and requires grant recipients to certify that public funds will not be used to advance DEI initiatives. The law also permits aggrieved individuals to file suit if they believe they are subjected to discrimination through DEI laws or policies, and establishes enforcement mechanisms, including penalties for officials who violate the law’s requirements. While the law is directed at local governments rather than private employers, it is part of an ongoing legislative campaign to restrict or eliminate DEI programs and funding. Private employers in Florida should monitor legislative developments closely, as continued expansion of DEI restrictions to the private sector remains a possibility.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

Iowa

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Discussion

Waterloo, IA: New Distracted Driving Ordinance

Effective March 16, 2026, Ordinance No. 5830 adds a new section to Waterloo’s Traffic Code prohibiting the use of electronic devices while operating a motor vehicle unless the vehicle is fully stopped and off the traveled portion of the roadway, or is positioned as far from the center of the roadway as practicable if it cannot be fully removed from the roadway. Devices that are physically or electronically integrated into the vehicle, such as a built-in GPS or navigation system, are excluded, provided the destination is entered before the vehicle is in motion. Employers with employees who drive as part of their job duties should review distracted driving policies and training materials for compliance with the new ordinance’s requirements.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

Illinois

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Discussion

REMINDER | Illinois Neonatal Intensive Care Leave Begins

As of June 1, 2026, the Family Neonatal Intensive Care Leave Act requires covered employers to offer unpaid leave to eligible employees whose child is admitted to a Neonatal Intensive Care Unit (NICU). Leave entitlements under the Act are tiered by employer size, requiring employers with 16 to 50 employees to provide up to 10 days of leave, while employers with 51 or more employees are required to provide up to 20 days. Covered employers should review their leave policies and have applicable personnel trained on leave requirements ahead of the June 1, 2026, effective date.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase

Indiana

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Indiana: Updates to Employment Eligibility Verification, Unemployment Insurance, and Youth Workers Rules

APPLIES TO

As Indicated

EFFECTIVE

JUL 1, 2026

QUESTIONS?

Contact HR On-Call

(888) 378-2456

 

Quick Look

  • Indiana employers are prohibited from knowingly or intentionally recruiting, hiring, or continuing to employ unauthorized aliens, with enforcement authority vested in the state’s Attorney General.
  • Two new laws expand Indiana employers’ unemployment insurance reporting obligations, requiring notification to the Department of Workforce Development upon certain employee separations and significantly expanding the per-employee data fields required on quarterly contribution reports.
  • The state-run Youth Employment System is discontinued, ending employer registration and reporting requirements for minor workers aged 14 to 17.

Discussion

The Indiana legislature passed several bills impacting employer obligations. Key details are summarized below.

 

Employment Eligibility Verification. Effective July 1, 2026, SB 76 makes it unlawful for an employer to knowingly or intentionally recruit, hire, or continue to employ an unauthorized alien. The law allows the state’s Attorney General to bring an enforcement action against an employer if probable cause exists that the employer has violated the law’s recruitment and hiring restrictions. The law also prohibits an employer from discharging or discriminating against an employee because the employee communicated or cooperated with the attorney general in connection with an investigation.

 

Unemployment Insurance. Two bills impact Indiana employers’ unemployment insurance reporting obligations beginning July 1, 2026:

 

  • SB 162 will require Indiana employers to notify the Department of Workforce Development if an employee separates from employment for any of the following reasons: voluntarily left the employment without good cause; discharged for just cause; discharged for gross misconduct in connection with the employee’s work; left due to the employee’s physical condition; left to accept other employment; or left to enter self-employment.
  • SB 214 amends the state’s unemployment insurance tax law to clarify how certain payments are treated as taxable wages subject to contributions, including meals and lodging provided as additional remuneration, wages in lieu of notice, back pay awards, commissions, certain bonuses, and reported tips over $20. The amendments confirm that other payments, such as employee discounts, certain travel reimbursements, and unreported tips, are not subject to contribution. The amendments also significantly expand the information required on quarterly contribution reports, adding new per-employee data fields including start date, physical worksite zip code, full-time or part-time status, weekly payroll presence, and applicable Standard Occupational Classification code, in addition to existing wage and identification information. Employers should be aware that late or missing quarterly reports may result in DWD-estimated assessments plus a $25 penalty per report, and that the DWD may require electronic payment of contributions and, in certain circumstances, accelerate contribution due dates with at least 30 days’ notice.

 

Youth Workers. Effective July 1, 2026, HB 1302 discontinues the state-run Youth Employment System (YES) and ends employer reporting of teen workers (aged 14 to 17). The Indiana Department of Labor will no longer maintain the YES database or require employer registration or updates for minor workers.

 

Action Items

  1. Review recruitment, hiring, and employment eligibility verification practices for compliance.
  2. Review and update employee separation notification procedures.
  3. Review payroll systems and consult with payroll provider regarding compliance with reporting for new per-employee data fields.
  4. Review youth worker reporting practices, as applicable.
  5. Have appropriate personnel trained on the updated requirements.

 

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2026 ManagEase