Compliance Corner [March 2026]
Here is what is new in March 2025
Change in Reporting Criteria for Some 1099 Forms
The Controversial Independent Contractor Change (2021)
Summary of Recent State & City Changes (courtesy of ADP)
Small Business Administration and DoD Implement New Requirements for 8(a) and Small Business Contractors
Changes Being Proposed to WARN Act
List of New Employer Requirements in California
States Requiring Data Privacy Risk Assessments
Possible Areas for Handbook Updates
Expensive Harassment Verdict
New York New Regulations
Misclassifying Employees As Independent Contractors Case
Change in Reporting Criteria for Some 1099 Forms
The One Big Beautiful Bill Act (OBBBA) included some modifications that simplify the reporting requirements for 1099 forms by returning them to the original plan levels:
The Original Rules (2011-2023)
Payment platforms only had to send you a 1099-K if the recipient met both of these criteria:
More than $20,000 in total payments
More than 200 separate transactions
As a result, most casual sellers and small-scale gig workers never saw a 1099-K form.
The Controversial Independent Contractor Change (2021)
The “American Rescue Plan” Act slashed the minimum to just $600 in total payments, and it included ALL transactions. with no exceptions. This change was supposed to take effect in 2023, but it was delayed due to widespread “concerns”. The IRS then tried to phase it in by lowering the threshold in steps, as follows:
2024: $5,000 threshold
2025: $2,500 threshold
2026: $600 threshold
The OBBBA has disposed of this overreach entirely for Forms 1099-K, returning to the original rules, as stated above. The effects for small-scope gig workers are very significant, and the payment platforms (e.g., PayPal, Stripe, etc.) also benefit from reduced administrative and compliance costs.
IMPORTANT: Forms 1099-NEC and 1099-MISC must be issued for recipients receiving $2000 or more.
Also, gig workers must still pay income tax on ALL income, regardless of whether or not it was covered by a 1099.
Summary of Recent State & City Changes (courtesy of ADP)
California Issues Preliminary Guidance on Pay Data Reporting for 2025, Includes New Data Fields
California Publishes Template for "Know Your Rights" Notice was due February 1
Colorado Delays AI Law
Delaware Amends Regulations for Paid Family and Medical Leave
Illinois Adds New Worker Protections
Illinois Enacts Law Protecting Certain Employee Use of Employer-Provided Equipment
Maine Restricts Employers' Surveillance of Employees
Nevada Strengthens Protections Against Wildfire Smoke Exposure
New Jersey Codifies Prohibitions Against Disparate Impact Discrimination
Reminder: New Jersey Employers Must Report All Separations Electronically
New York State Bans Using Credit History in Employment Decisions
Oregon Adds Workplace Violence Prevention Requirements
Pennsylvania Requires Veterans' Benefits and Services Poster
Local
New York City Adds Pay Data Reporting Requirement
Philadelphia Adds Menstruation, Menopause and Perimenopause Protections
Small Business Administration and DoD Implement New Requirements for
8(a) and Small Business Contractors
Contracts for federal contractors with 8(a), small business set-asides and/or sole-source contracts exceeding $20 million are being reviewed by both DoD and the SBA, respectively. DoD has issued a video notice; the SBA has issued new guidance for 8(a) contractors and has suspended over 1,000 contractors who missed their January 19 deadline for submission of required audit documentation.
Changes Being Proposed to WARN Act
The Worker Adjustment and Retraining Notification (WARN) Act was passed and implemented in 1988. In response to a high level of worker displacement in 2025, a new piece of legislation, the “Fair Warning Act,” has been introduced in the House of Representatives (HR 5761) that would dramatically lower the thresholds for notification to and support of affected workers. An unofficial comparison follows:
| EMPLOYMENT ACTION | WARN ACT | FAIR WARNING ACT |
|---|---|---|
| Definition of covered employer | 100 employees (full-time only) | 50 employees incl. part-time or annual payroll of $2 million (min.); broader definition of “employer” |
| “Plant Closing” or “Mass Layoff” | Complete closing; or 500 employees in total; or 50 or more affected employees within 30-day period if equal to 33% of workforce | Renamed to “Site closing”; 5 or more employees at single employment site during 30-day period |
| Mass layoff redefined | n/a | 10 or more employees at single site during any 90-day period; OR 250 total employees across all sites. No percentage threshold. |
| Remote workers | Not addressed in act | Counted toward any associated site |
| Reductions in hours | More than 50% reduction in hours during each month in any 6-month period | More than 50% reduction in hours during each month in any 90-day period |
| Notice period | 60 days | 90 days, notice to go to state governor(s) and employment commissions; specified formats |
Updates will be provided as they become available.
List of New Employer Requirements in California
The governor of CA has signed into law a group of new requirements on California employers, including the following:
Pay equity & pay-data reporting obligations
WARN Act (CA version) expansions and workforce reduction risks
AI and technology use in employment decisions
Employee organizing and “Know Your Rights” requirements
Personnel records access, retention, and compliance
Paid leave expansions and enforcement risks
Tip theft, wage protection, and penalty exposure
Employers are advised to ensure that their policies are compliant.
States Requiring Data Privacy Risk Assessments
The following states require assessments whenever a business engages in any kind of activity that might lead to divulging of individuals’ private information that might be used to harm them. Specific definitions vary from state to state, but that is the general premise.
California, Colorado, Connecticut, Delaware, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee, Texas, Utah, and Virginia.
Maine, Massachusetts, Michigan, New York, North Carolina, Pennsylvania, and Vermont have similar bills in progress in their legislatures.
Possible Areas for Handbook Updates
According to “Eventbrite,” the following topics in employee handbooks should be examined for potential updating:
Mandatory handbook updates tied to the OBBB Act
How tip and overtime deductions must be explained to employees
Payroll, tax, and reporting language employers are expected to include
AI and technology policies regulators now expect to see
Remote, hybrid, and flexible work rules that must be clarified
Paid leave, discrimination, and inclusion policy updates
Expensive Harassment Verdict
A Payroll Director and HR Director for a Utah company cost their employer over $5 million by failing to handle harassment cases properly. The payroll director (a male) harassed two female employees sequentially. The first victim complained to the VP of HR (a female). The HR VP allegedly investigated the complaint of the first person and dismissed it, but the conduct continued. The second victim went directly to the EEOC, who first interviewed her, then interviewed the previous employee, who corroborated her story.. She then filed a charge with the Utah “Antidiscrimination and Labor Division,” whose mediation attempts failed; she then withdrew her claim to try to improve the work environment. Two months later, she was terminated.
A jury awarded the second victim $75k for non-economic damages and $2 million for punitive damages, noting among other things that the HR VP had failed to follow the company’s progressive discipline policy – which she herself had written.
New York New Regulations
Employers with employees in New York are cautioned to check their pay levels against new minimums set for the state and specifically for New York City, Long Island and Westchester County. NYC has also expanded their requirements for earned sick and safe leave time – again - plus seven other new employment-related requirements (including increased exemption levels).
Misclassifying Employees As Independent Contractors Case
A home health care company is being sued for $5.9 million by DOL for misclassifying its workers as independent contractors to avoid paying them overtime, based upon the degree of control the company exerted over their scheduling and reporting requirements. A judge has agreed with some of DOL’s findings but has decreed that other aspects of the case should be heard by a jury. Either way, it doesn’t look very good for the employer.