What new employment laws take effect in the new year? On January 1, 2027, at least a dozen states raise their minimum wage, Maryland employers start paying into the state's new paid family and medical leave program, and Colorado's rewritten AI law starts requiring notices when automated tools help make hiring and firing decisions. Federal changes are mostly about reporting and enforcement: new W-2 codes for tips and overtime, a higher Social Security wage base, and an EEOC that is pulling back long-standing guidance. More changes follow during 2027, including new pay transparency, non-compete and paid sick leave laws.
Key Takeaways
- Minimum wage goes up in at least 12 states on January 1, 2027, including New Jersey ($16.48), California ($17.40), Washington ($17.73) and Michigan ($15.00). New York's standard rate does not change on January 1.
- Maryland FAMLI contributions start January 1, 2027, at a total rate of 0.90% of wages, with benefits starting no later than January 3, 2028.
- AI laws are moving from proposals to obligations. Colorado's law takes effect January 1, 2027, California adds AI-related WARN and discipline rules, and Connecticut's notice requirements follow in October 2027.
- Pay transparency keeps spreading. Delaware's law takes effect September 26, 2027, for employers with more than 25 employees, and Columbus, Ohio, adds a local law.
- Non-competes and "stay or pay" agreements face new limits, including New York's Trapped at Work Act in December 2026 and Washington's non-compete ban in June 2027.
- Federal guidance is being rolled back, but the law isn't. The EEOC is rescinding its criminal records and selection guidance, but Title VII and state fair chance laws still apply.
- Year-end payroll changes: 2026 Forms W-2 add codes for qualified tips and overtime, and the 2027 Social Security wage base rises to $192,300.
What Federal Employment Law Changes Should Employers Know?
There's no major new federal employment statute taking effect on January 1, 2027. The federal minimum wage stays at $7.25. The changes that matter are in payroll reporting, agency guidance and enforcement.
New W-2 reporting for tips and overtime
The 2025 federal tax law created deductions for qualified tips and qualified overtime pay, and employers have to report those amounts. The 2026 Form W-2, which employers issue in January 2027, adds new Box 12 codes for qualified tips (TP), qualified overtime compensation (TT) and employer contributions to "Trump accounts" (TA), plus tipped occupation codes. Payroll systems need to track which overtime is "qualified," generally the premium portion required by the FLSA, not overtime required only by state law or a contract. See the IRS Form W-2 page for the final instructions.
Social Security wage base rises
The 2027 Social Security wage base is $192,300, so employers will withhold and pay Social Security tax on more of each high earner's pay starting in January (Social Security Administration). That also matters for programs tied to the wage base, such as Maryland's FAMLI contributions.
EEOC is rescinding long-standing guidance
In October 2026, the EEOC sent a rule to the White House to rescind its 2012 guidance on arrest and conviction records, and it's moving to rescind the 1978 Uniform Guidelines on Employee Selection Procedures. Both changes follow a 2025 executive order directing agencies to stop pursuing disparate-impact claims.
This doesn't change the law. Title VII still prohibits practices that have an unjustified disparate impact, private plaintiffs can still sue, and state and local fair chance laws still restrict criminal background checks. Employers shouldn't drop their individualized assessment process.
NLRB and labor law enforcement
The Supreme Court declined in October 2026 to review the removal of former NLRB Member Gwynne Wilcox, confirming the President's power to remove Board members. The NLRA's protections for employees, including in nonunion workplaces, haven't changed. For recent examples, see can you fire an employee for complaining? and can employees discuss pay with each other?
Other federal updates
Tip credit: On October 19, 2026, the DOL withdrew three tip credit opinion letters, and a new tipped-employee rule is expected.
Federal contractors: The DOL has said it won't resume Section 503 affirmative action plan audits for individuals with disabilities, but will still investigate individual complaints.
Marijuana: State-licensed medical marijuana moved to Schedule III in April 2026, and a broader rescheduling decision is pending. See our guide to employee misconduct involving alcoholism, marijuana and drug use.
Which States Raise the Minimum Wage on January 1, 2027?
At least 12 states raise their general minimum wage on January 1, 2027. Several also raise tipped wages and the minimum salary for exempt employees, which is tied to the minimum wage in states such as California, Colorado, Maine, New York and Washington.
| State | 2026 rate | Rate on Jan. 1, 2027 |
|---|---|---|
| Arizona | $15.15 | $15.65 |
| California | $16.90 | $17.40 |
| Colorado | $15.16 | $15.71 |
| Connecticut | $16.94 | $17.48 |
| Maine | $15.10 | $15.70 |
| Michigan | $13.73 | $15.00 |
| Minnesota | $11.41 | $11.87 |
| New Jersey | $15.92 | $16.48 |
| Ohio | $11.00 | $11.40 |
| Rhode Island | $16.00 | $17.00 |
| Virginia | $12.77 | $13.75 |
| Washington | $17.13 | $17.73 |
General hourly minimum wage. Tipped, youth, small-employer and local rates may differ. No change on January 1 in New York, Pennsylvania, Delaware or Maryland.
Local minimum wages in Maryland and Philadelphia
- Howard County, Maryland (January 1, 2027): The county minimum wage reached $16.00 for all employers on July 1, 2026, and starting in January 2027 it adjusts each year for inflation. The 2027 rate hadn't been posted as of this writing; check Howard County's minimum wage page.
- Montgomery County, Maryland (July 1, 2027): Current rates are $18.00 for employers with 51 or more employees, $16.50 for employers with 11 to 50 and $15.95 for employers with 10 or fewer. Rates rise again each July 1.
- Philadelphia city contractors (July 1, 2027): Pennsylvania doesn't allow local general minimum wages, but businesses with Philadelphia city contracts, subcontracts, leases or grants must pay at least $17.63 an hour for agreements starting or renewed on or after July 1, 2026, and the rate adjusts each July 1 (City of Philadelphia).
New Jersey and New York don't have county or city minimum wages. New York's higher rate for New York City, Long Island and Westchester is set by the state.
Not changing on January 1: New York stays at $17.00 in New York City, Long Island and Westchester and $16.00 in the rest of the state, because an inflation "off-ramp" blocked the scheduled increase. A further increase has been proposed but needs legislative approval (New York State). Pennsylvania stays at the federal $7.25, and Delaware and Maryland stay at $15.00. Alaska rises to $15.00 on July 1, 2027.
New Jersey details: Seasonal employers and employers with fewer than six employees move to $16.25, the tipped cash wage rises to $6.61, and long-term care direct care staff move to $19.48 (New Jersey Department of Labor). California's exempt salary minimum rises to $72,384.
Many cities and counties set higher rates, often effective January 1 or July 1. Check the U.S. Department of Labor's state minimum wage page and each state labor department before you finalize payroll, and update your required minimum wage posters.
What Paid Leave Laws Take Effect in 2027?
Paid leave keeps expanding state by state. These are the biggest changes for 2027 and early 2028:
Maryland Family and Medical Leave Insurance (FAMLI): Contributions start January 1, 2027, at a total rate of 0.90% of covered wages up to the Social Security wage base. Employers with 15 or more employees can withhold up to half from employee pay and must pay the rest. Employers with fewer than 15 employees don't pay an employer share but must remit what they withhold. Benefits begin no later than January 3, 2028 (Maryland Department of Labor).
Connecticut paid sick leave: Starting January 1, 2027, the law covers employers with one or more employees, completing its phase-in.
New York Paid Family Leave: Starting January 1, 2027, coverage extends to certain construction workers who have worked 26 of the last 39 weeks for a covered employer.
California bereavement leave: Starting January 1, 2027, employees can take up to five days of bereavement leave for the death of a "designated person," not just a family member.
Virginia paid sick leave: Starting July 1, 2027, Virginia's new paid sick and safe leave law covers employers with 50 or more employees, with up to 40 hours a year. It expands to employers with 25 to 49 employees in 2028 and to all private employers in 2029.
Virginia Paid Family and Medical Leave: A new state insurance program with payroll contributions starting in April 2028 and benefits starting December 1, 2028, paying up to 12 weeks at 80% of wages up to a cap.
Programs that started recently are also still settling in, including Delaware's paid leave program (benefits since January 2026) and Minnesota's paid leave program (since January 2026). Update leave policies, payroll deductions and posters for every state where you have employees, including remote workers. Coordinating these programs with FMLA is where most employers get tripped up; our FMLA and ADA compliance services can help.
What New Pay Transparency Laws Take Effect?
Pay range disclosure is quickly becoming the norm. Laws in Virginia (July 1, 2026) and Maine (July 29, 2026) just took effect, and Connecticut began requiring a general description of benefits in job postings on October 1, 2026. Coming next:
Columbus, Ohio (January 1, 2027): Employers with 15 or more employees in the city must include a reasonable salary range in job postings.
California (January 1, 2027): The pay data reporting law is replaced with an expanded list of job categories, and penalties for repeated failures to report rise to up to $1,000 per employee.
Bethlehem, Pennsylvania (June 24, 2027): A local salary history ban takes effect.
Colorado (July 1, 2027): Private employers with 100 or more employees must include EEO-1 workforce demographic data in reports filed with the Secretary of State.
Delaware (September 26, 2027): Employers with more than 25 employees must include a pay range and a general description of benefits in internal and external job postings, and share it with applicants before discussing pay (Delaware General Assembly, HB 105).
Pay transparency also makes it easier for employees to compare pay, and they have a federal right to discuss it. See can employees discuss pay with each other? and our guide to pay transparency laws.
What Are the New Laws on AI in Hiring and Employment Decisions?
If you use software that screens resumes, ranks candidates, schedules interviews, scores performance or flags employees for discipline, several new laws may apply, even if a vendor runs the tool.
Colorado (January 1, 2027): The state's rewritten AI law (SB 26-189) replaces the 2024 Colorado AI Act. Employers using automated decision-making technology that materially influences hiring, promotion, discipline or termination must give notice before using it, explain an adverse decision in plain language within 30 days, and offer a way to correct inaccurate data and get meaningful human review. The Attorney General enforces it; there's no private lawsuit.
California (January 1 and July 1, 2027): WARN notices must disclose when AI or automation is a substantial cause of a layoff (SB 951). Starting July 1, 2027, employers can't discipline or fire employees based solely on an automated decision system without human corroboration and written notice (SB 947). New limits on workplace surveillance also take effect January 1, including bans on tools that infer emotions and on surveillance in bathrooms.
Connecticut (October 1, 2026 and October 1, 2027): Employers filing WARN notices must say whether layoffs are related to AI, and employees and applicants have new rights when automated profiling denies them employment. Advance notice requirements for automated employment decision tools follow in October 2027.
Illinois (already in effect since January 1, 2026): The Illinois Human Rights Act prohibits using AI in a way that discriminates and requires notice to employees when AI is used for employment decisions.
AI tools don't move liability to the vendor. The employer is still responsible if a tool screens out protected groups. Take an inventory of every tool that touches hiring or employee decisions, ask vendors for their documentation, and build in human review. For more, see why employers are liable for AI decisions.
What's Changing for Background Checks and Criminal Records?
While the EEOC steps back from its criminal records guidance, states are moving the other way, with more fair chance hiring rules and automatic record sealing:
Washington (January 1, 2027): Revised Fair Chance Act rules, which took effect July 1, 2026, for employers with 15 or more employees, extend to smaller employers.
New York: Under the Clean Slate Act, the state has until November 16, 2027, to finish automatically sealing eligible convictions. Sealed records generally can't be used in employment decisions, so expect fewer convictions to show up on background checks.
Missouri (by January 1, 2027) and Oklahoma (by November 1, 2027): Automatic expungement systems come online.
Virginia (July 1, 2026): Expanded record sealing took effect.
San Francisco (August 10, 2026): An amended Fair Chance Ordinance took effect.
Philadelphia, New York City and many other cities and states already limit when and how employers can ask about criminal history. Review your application, offer letter and background check process for every location, and keep using an individualized assessment before taking action based on a record. For hiring problems that become lawsuits, see how a single background check failure became a class action.
Other New Employment Laws to Watch
Non-competes and "stay or pay" agreements
States continue to restrict non-competes and agreements that make employees repay training or other costs if they leave:
New York (December 19, 2026): The Trapped at Work Act limits agreements requiring employees to repay employers when they leave. Recent amendments narrow it to employees and add exceptions for bonuses, relocation assistance, qualified tuition repayment and union agreements.
Connecticut (October 1, 2026): Employers can't require employees to pay money if they leave before a set period, such as training repayment agreements.
California: A 2026 amendment limits the state's "stay or pay" ban to contracts entered on or after January 1, 2027, and adds exceptions.
Washington (June 30, 2027): Non-competes are banned for Washington-based workers and businesses, with a narrow exception for repaying certain education costs.
Nebraska (July 1, 2027): Health care staffing agencies can't use non-competes with their workers.
If you use training repayment agreements, sign-on bonus clawbacks or non-competes, review them now.
Immigration enforcement and worksite notices
Several states now require employers to notify employees when immigration authorities inspect I-9 records. Washington's requirements took effect October 1, 2026, and Massachusetts's PROTECT Act, enacted in August 2026, requires written notice within 48 hours of an ICE Notice of Inspection. California extends immigration-related retaliation protections to applicants and former employees on January 1, 2027, and Tennessee expands its employment verification law to more private employers the same day. See our guide to preparing for an ICE raid.
"Captive audience" meetings
Starting October 1, 2026, Maryland employers can't take action against employees who decline to attend employer-sponsored meetings mainly about religious or political matters, including whether to join a union. Employers must post a notice the state will issue. Maryland joins a growing group of states with similar laws, several of which face court challenges.
Other notable changes
Oregon (January 1, 2027): Intentionally failing to pay for labor can be prosecuted as criminal theft of services.
California (January 1, 2027): New rules expand the definition of sex discrimination under the Fair Employment and Housing Act, limit enforcement of some arbitration agreements, and strengthen Cal/OSHA's authority over willful violations.
Connecticut (October 1, 2026): Time spent in employer-required security screening counts as hours worked, and employers have new lactation, monitoring notice and overtime pay notice requirements.
New Employment Laws in Pennsylvania, New Jersey, New York, Delaware and Maryland
Pennsylvania
The state minimum wage stays at $7.25. Increase bills have been debated but haven't been enacted, so watch for changes.
Bethlehem's salary history ban takes effect June 24, 2027.
Philadelphia's fair chance and pre-employment marijuana testing rules still apply, and medical marijuana users remain protected under the state Medical Marijuana Act.
New Jersey
The minimum wage rises to $16.48 on January 1, 2027, with separate rates for small and seasonal employers, agricultural workers, tipped workers and long-term care staff.
New Jersey's pay transparency law, in effect since June 2025, and its cannabis workplace rules continue to apply.
New York
The standard minimum wage does not increase on January 1, 2027. Home care aide rates do rise, and a further increase has been proposed.
The Trapped at Work Act takes effect December 19, 2026, limiting "stay or pay" repayment agreements.
Paid Family Leave extends to certain construction workers on January 1, 2027.
Automatic sealing under the Clean Slate Act must be completed by November 16, 2027.
A bill passed in June 2026 would require certain businesses to report on AI's effect on their workforce, if the Governor signs it.
Delaware
The pay transparency law takes effect September 26, 2027, for employers with more than 25 employees.
Delaware Paid Leave benefits have been available since January 2026, so leave requests under the program are now routine.
The minimum wage stays at $15.00.
Maryland
FAMLI contributions start January 1, 2027, and benefits begin no later than January 3, 2028.
The captive audience meeting law took effect October 1, 2026.
Non-competes with certain licensed architects are banned as of October 1, 2026.
The minimum wage stays at $15.00.
Year-End Employment Law Compliance Checklist
Use this checklist to get ready for January 1 and the rest of 2027:
- Update pay rates for minimum wage increases in every state and city where you have employees, including remote workers, and check exempt salary minimums.
- Set up new payroll deductions, including Maryland FAMLI contributions starting January 1, 2027, and the new Social Security wage base.
- Prepare for 2026 W-2s with the new codes for qualified tips, qualified overtime and Trump account contributions.
- Update leave policies for new and expanded paid leave laws, and coordinate them with FMLA.
- Review job postings for pay transparency requirements, including Columbus, Ohio, in January and Delaware in September.
- Inventory AI and automated tools used in hiring, discipline and termination, and add required notices and human review.
- Review non-competes, training repayment agreements and sign-on bonus clawbacks against New York, Connecticut, California and Washington rules.
- Update background check practices for fair chance laws and sealed records.
- Prepare managers for immigration enforcement and the employee notice rules in your states.
- Replace required workplace posters and update your employee handbook, then collect new acknowledgments.
For a broader review, see our HR compliance audit checklist and common employee handbook mistakes.
Not sure which of these laws apply to you? Take our free Workplace Diagnostic Questionnaire, or schedule a confidential consultation for a year-end compliance review.
How CHRO Helps Employers Keep Up With New Employment Laws
CHRO, LLC is an attorney-led fractional HR firm serving employers in Pennsylvania, New Jersey, Delaware, Maryland, New York and nationwide. Through our HR and labor law compliance services and Outsourced CHRO Program, we help employers:
Run a year-end compliance review of pay, leave, postings and policies for every state where they have employees.
Update employee handbooks and state supplements for new laws.
Set up new paid leave programs and coordinate them with FMLA and the ADA.
Review AI tools, job postings and background check practices for new state requirements.
Train managers on what's changed and what it means for day-to-day decisions.
Frequently Asked Questions About New Employment Laws
What new employment laws take effect January 1, 2027?
The biggest changes on January 1, 2027, are minimum wage increases in at least 12 states, the start of Maryland's FAMLI payroll contributions, Colorado's AI law for automated employment decisions, Connecticut's paid sick leave expansion to all employers, New York Paid Family Leave coverage for certain construction workers, and a group of California laws on AI, workplace surveillance, bereavement leave and arbitration.
Is there a federal minimum wage increase in 2027?
No. The federal minimum wage stays at $7.25 an hour. Employers in states and cities with higher rates must pay the higher rate.
Does New York's minimum wage go up on January 1, 2027?
No. New York's standard minimum wage stays at $17.00 in New York City, Long Island and Westchester and $16.00 in the rest of the state, because an inflation-based increase was blocked. Home care aide rates do increase, and a further increase has been proposed but requires legislative approval.
When do Maryland FAMLI contributions start?
January 1, 2027. The total rate is 0.90% of wages up to the Social Security wage base. Employers with 15 or more employees pay at least half, and employers with fewer than 15 employees only remit the employee share they withhold. Benefits begin no later than January 3, 2028.
What do employers need to change on 2026 W-2s?
The 2026 Form W-2, issued in early 2027, adds Box 12 codes for qualified tips, qualified overtime compensation and employer contributions to Trump accounts, plus tipped occupation codes. Employers need payroll systems that separately track qualified overtime and tips.
Are employers required to disclose pay ranges in job postings?
In a growing number of states and cities, yes. New York, New Jersey, Maryland, California, Colorado, Illinois, Washington and others already require pay ranges, Virginia and Maine joined in 2026, and Delaware's law takes effect September 26, 2027, for employers with more than 25 employees.
Do new AI laws apply if a vendor runs our hiring software?
Generally, yes. Laws such as Colorado's and Illinois's apply to the employer that uses the tool to make or influence employment decisions. Employers remain liable for discrimination caused by a vendor's tool, so they need to know what their tools do and provide the required notices.
Can employers still use criminal background checks after the EEOC rescinds its guidance?
Yes, but Title VII still prohibits practices with an unjustified disparate impact, private plaintiffs can still sue, and state and local fair chance laws still limit when and how employers can consider criminal history. Keep using an individualized assessment.
The Bottom Line on New Employment Laws
The new year brings higher minimum wages, a new Maryland payroll contribution, AI notice rules and new W-2 reporting, followed by a steady stream of pay transparency, paid leave and non-compete changes throughout 2027. Multistate and remote employers feel these changes most, because each employee follows the rules of the state and city where they work. Start with payroll and postings before January 1, then update policies and train managers.
CHRO can help. Schedule a confidential consultation for a year-end compliance review, or start with our free Workplace Diagnostic Questionnaire.
Can employees legally share their pay with each other? In most cases, yes, and that's true whether or not there's a union. A federal appeals court recently upheld a finding that an employer illegally fired an engineer for organizing a pay-sharing effort among coworkers. Here's what employers can and can't do when employees disclose pay information to each other, and the steps to take next.