According to the U.S. Department of Labor, 31 states, plus Puerto Rico, the U.S. Virgin Islands, and Guam, have minimum wage laws higher than the federal minimum wage. Many states will raise their minimum wage rates effective January 1, 2026. These changes result from previously enacted laws or annual inflation adjustments and will affect employers across a wide range of industries.

The states below have minimum wage increases effective January 1, 2026:

Arizona, California, Colorado, Connecticut, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, Virginia, Washington

Many states use automatic formulas tied to cost-of-living or CPI increases. Employers should plan for the possibility that some final 2026 numbers may be announced closer to the effective date. There may be additional states beyond those listed above, or other changes affecting tipped employees.

For employers, these increases mean reviewing wage rates for all non-exempt employees to ensure compliance. Most states also require updated workplace postings or notices when minimum wage rates change. Employers should review state posting requirements and ensure the necessary posters are displayed at the start of the year.

Preparing early for these increases reduces the risk of payroll errors, back-wage liability, and administrative problems after the new year begins. Employers should check local requirements, as other states, cities, and counties, as well as changes for tipped employees, may be different.

As the 2026 plan year approaches, the Internal Revenue Service (IRS) has updated key contribution limits for workplace retirement plans. Here are some of the changes:

• The annual contribution limit for employees in a 401(k) plan is increasing to $24,500 (up from $23,500 in 2025).
• For employees aged 50 or older, the general catch-up contribution limit for those plans will increase to $8,000 (from $7,500).
• For participants aged 60-63 in those plans, the higher catch-up limit remains at $11,250.
• The limit on annual contributions to an Individual Retirement Arrangement (IRA) will increase to $7,500 (from $7,000).
• Other necessary adjustments include increasing SIMPLE retirement account limits (from $16,500 to $17,000) and raising catch-up limits for SIMPLE plans.
• Income-based phase-out ranges for traditional IRA deductibility, Roth IRA contributions, and the Saver’s Credit have all been adjusted upward.

Employers should prepare for the 2026 retirement plan contribution increases by updating payroll notices, benefits communications, and plan documents, and verifying that their record-keeper systems can accommodate the higher limits. It may also be helpful to remind employees—particularly those eligible for catch-up contributions—to review their savings strategy, while ensuring internal procedures and compliance checks are aligned with the new thresholds. Employers should communicate the upcoming limit changes to HR and benefits staff and plan administrative reviews, such as open enrollment or year-end communications, to ensure a smooth transition.

For full details, see the IRS announcement here: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500

The U.S. Small Business Administration (SBA) recently updated agency contracting goals for fiscal year 2025. Minimum small business contracting goals are in statute, including the overall 23% small business prime contracting goal, but the federal government can establish more significant requirements.

Each year, the SBA publishes specific small business contracting goals by type for the 24 agencies subject to the Chief Financial Officers Act. Within the overall 23% small business prime contracting goal, the SBA can establish greater requirements for small disadvantaged businesses (SDBs), women-owned small businesses (WOSBs), service-disabled veteran-owned small businesses (SDVOSBs), and those participating in the HUBZone program.

The SBA works with federal agencies to ensure compliance, track performance, and adjust goals as needed. This goal benefits small businesses and protects the nation’s supply chain by broadening access to more sources.

The most recent SBA update slightly adjusts some agency-wide prime contract goals and retains the same percentages for WOSBs, SDVOSBs, and HUBZone small businesses. However, it reduced prime contract goals for small disadvantaged firms to 5%, which had increased during the previous administration.

An explanation of the SBA goaling program and each year’s goals can be found at https://www.sba.gov/document/support-agency-contracting-goals.

The U.S. Census Bureau announced construction spending for December 2024 was at a seasonally adjusted annual rate of $2,192 billion, 4.3% above the previous year.

While private construction spending in December was $1,688 billion, 0.8% above the  November estimate of $1,674 billion, public construction spending was $504 billion, 0.4 % below the November estimate of $506 billion. A key contributor to public construction was highway construction at $143 billion, 0.7 % above the November estimate of $142 billion.

Compared to the previous year, the value of public construction in 2024 was $504 billion, 4.3% above 2023 spending.

Read More:

https://www.census.gov/construction/c30/pdf/release.pdf

On February 4, 2025, a U.S. appeals court upheld President Joe Biden’s executive order requiring a minimum wage for federal contractors, which increased to $17.75 per hour on January 1, 2025. The decision affirms that covered federal contractors must comply with this wage floor, which applies to contracts governed by the Service Contract Act (SCA) and Davis-Bacon Act (DBA), among others.

This mandate originated from Executive Order 14026, issued in 2021, establishing an annual inflation-based adjustment to the minimum wage for federal contract workers. The most recent increase follows this adjustment process.

The ruling emphasizes compliance obligations for businesses with federal contracts, which may affect contract pricing and payroll structures. Employers should ensure their payroll systems align with this recent ruling.

While legal challenges may continue, this ruling reinforces the federal government’s authority to set and enforce wage standards for contract workers. Under the current administration, there is also the potential for policy shifts, and employers will need to monitor regulatory developments and be prepared to adjust compensation practices accordingly.

Upon taking office on January 20, 2025, one of President Trump’s first acts was to sign an executive order that rescinded 78 of President Biden’s executive orders or actions. Many actions affected issues relating to the federal workforce or climate change, but one item also addressed the Service Contract Act.

Included in the list of 78 rescissions was Executive Order 14055, the Nondisplacement of Qualified Workers Under Service Contract. Biden’s EO 14055 reversed a Trump rescission of an EO implemented during the Obama Administration.

EO 14055 enabled employees working on predecessor contracts covered by the Service Contract Act and meeting other requirements, who would otherwise be terminated due to the contract’s end, to be offered by the successor “a right of first refusal of employment under this contract in positions for which those employees are qualified.”

The likely immediate impact is that the non-displacement clause will no longer be included in new solicitations or contracts. Further information is needed to understand the impact on existing contracts or option years.