#employee-benefits
Discover employee benefit options to attract talent and reduce turnover in small businesses
A safe harbor 401(k) automatically passes IRS ADP/ACP nondiscrimination testing in exchange for a fixed employer contribution — a 3% nonelective or a match of up to 4%. Here's how the three formulas compare in cost, the December 1 retroactive adoption deadline, and the 2026 limits ($24,500 deferral, $72,000 total additions, mandatory Roth catch-ups for high earners).
DOL Opinion Letter FLSA2026-6 (May 28, 2026) confirms that a quarterly bonus paid as a fixed percentage of total earnings — straight-time plus overtime — satisfies FLSA overtime requirements under 29 CFR § 778.210 with no workweek-by-workweek recalculation. Here are the four conditions the exception depends on and a compliance checklist for small businesses.
DOL Opinion Letter FLSA2026-2 (January 5, 2026) holds that a formula-driven safety and attendance bonus of up to $9.50/hour is nondiscretionary and must be included in the FLSA regular rate — turning a $12/hour base into a $21.50 regular rate and adding $107.50 of overtime pay in DOL's own 50-hour example. Here is the three-part test, which common bonus types fail it, and how to fix the payroll math.
Texas federal courts vacated the DOL's Retirement Security Rule in March 2026, reverting fiduciary status for retirement advice to the 1975 five-part test — the second such rule struck down since 2018. Here's what 401(k) plan sponsors should check now: advisor fiduciary status in writing, compensation disclosures, and a documentation checklist, plus what the DOL's new alternative-assets safe harbor proposal means for small plans.
Starting January 1, 2026, OBBBA's new IRC §274(o) cuts the employer deduction for on-site cafeterias, office snacks, and "convenience of the employer" meals from 50% (or 100%) to zero, while client meals, travel meals, and restaurant employee meals keep their old treatment. Here's the math on what the change costs and how small businesses should restructure their books.
Gusto's Simple tier runs $49/month + $6 per employee but gates multi-state payroll behind an $80 Plus tier; OnPay's single ~$40–59 + $6 plan includes it standard. A feature-by-feature cost comparison for businesses with 2–9 employees, covering PTO, direct deposit, benefits availability, support, and integrations.
Illinois' Family Neonatal Intensive Care Leave Act takes effect June 1, 2026, requiring employers with 16 or more employees to provide 10 to 20 days of unpaid, job-protected leave for children hospitalized in a NICU, with civil penalties up to $5,000 per affected employee.
The IRS raised 2026 HSA limits to $4,400 self-only and $8,750 family (Revenue Procedure 2025-19). A small business owner's guide to the S-corp more-than-2% shareholder rules, the 35% comparability excise tax, cafeteria plan workarounds, and how to avoid excess-contribution penalties.
Connecticut's paid sick leave law now covers employers with 11 or more employees as of January 1, 2026, dropping to zero threshold by 2027, while 17 states plus D.C. mandate some form of paid sick leave with accrual typically at one hour per 30 hours worked.
Employer HSA contributions outside a Section 125 cafeteria plan must be identical across comparable employees, or the IRS imposes a 35% excise tax on the full contribution pool, not just the excess.
Utah, Alabama, Tennessee, Georgia, and West Virginia now let businesses contribute to an independent contractor's portable benefit account without that contribution counting as evidence of employment. How the state safe harbors work, what Utah's 50% tax credit (up to $2,000 per contractor) covers, and how to track contributions in your books.
Section 125 cafeteria plans must pass three IRS nondiscrimination tests each year — eligibility, benefits and contributions, and the 25% key employee concentration test. This guide covers the 2026 thresholds ($220,000 officer and $160,000 HCI compensation, $3,400 FSA and $7,500 DCAP limits), what a failed test costs your top earners, and when a Simple Cafeteria Plan under Section 125(j) lets employers with 100 or fewer employees skip testing entirely.
