Payroll and HR compliance updates: May/June 2026

Effective May 15, 2026, the Department of Labor's Wage and Hour Division formally restored the 2019 FLSA Part 541 salary thresholds for executive, administrative, and professional employees. The restored levels are $684 per week for the standard white-collar exemption and $107,432 per year for highly compensated employees.

This is a technical amendment — not a new rule. The 2024 rule that significantly raised these thresholds was vacated by federal courts in November 2024, and the DOL has been enforcing the 2019 levels since then. The amendment formally removes the 2024 regulatory language from the Code of Federal Regulations and reinstates the 2019 text. Practically, nothing changed for employers already applying the 2019 thresholds.

What to do now: Confirm your exempt classifications are documented against the restored $684/week and $107,432/year thresholds. If your organization temporarily updated job documentation or offer letters to reflect the 2024 thresholds, those should be corrected. Review the Federal Register notice for the full technical amendment.

Note: Salary thresholds are a floor, not the full test. The duties test still applies. If you have employees near the threshold, confirm both the salary level and the duties criteria are met.

Colorado S.B. 26-121, signed May 4, 2026, raises the overtime threshold for agricultural workers from 48 hours to 56 hours per workweek, effective January 1, 2027. Employers who pay overtime to ag workers at 48 hours today will need to update that threshold before year-end.

The bill also increases penalties for agricultural employers who commit wage theft and removes the state labor director's authority to set overtime rules for ag employees going forward — so this 56-hour threshold is set by statute, not administrative rule.

What to do now: If you operate in Colorado with agricultural workers, audit your overtime configuration to reflect the January 1, 2027 change. Build the update into your year-end payroll prep calendar rather than treating it as a January task. Payroll environments with state-specific pay rules benefit from purpose-built configuration — this is exactly the kind of state variation that general-purpose systems handle poorly.

Utah's State Tax Commission released an updated Publication 14 (Withholding Tax Guide) reflecting the state's income tax rate reduction from 4.5% to 4.45%, effective June 1, 2026. Employers with Utah workers need to apply the new tables to pay periods on or after that date.

What to do now: Verify your payroll system is using the updated Utah withholding tables for June 1 and forward. Employees won't see a dramatic change in take-home pay, but the rate difference — even small — accumulates over time and will affect year-end W-2 accuracy if not corrected promptly. Pull the updated Utah Publication 14 directly from the State Tax Commission to verify your tables match.

The IRS has set a hard deadline: no new TCC applications for the FIRE system after July 21, 2026. Existing FIRE TCC applications can be updated through December 2026, after which they become read-only. The FIRE system itself retires December 31, 2026.

Starting with filing season 2027 (tax year 2026 returns), IRIS (Information Returns Intake System) is the only accepted system for electronic information return filing. That includes current-year filings, prior-year filings, and corrections. FIRE is fully gone.

Critical detail: your existing FIRE TCC does not carry over to IRIS. You must apply for a separate IRIS TCC — and that process can take up to 45 business days. If you're filing through IRIS directly (not through a third-party transmitter), apply now.

What to do now:

• Apply for an IRIS TCC at IRS.gov/iris if you haven't. Allow 45 business days for processing.
• Confirm with any third-party payroll or 1099 vendors that they are IRIS-ready for tax year 2026 filings.
• For tax year 2025 returns still being corrected through FIRE in 2026, maintain FIRE access through early 2027.

Greenshades' year-end forms processing handles 1099 and information return filing through supported channels. Confirm with your account team that your configuration is aligned with the IRIS transition for 2026 tax year filings.

ACA employer shared responsibility payments — indexed amounts updated

Revenue Procedure 2026-22 provides updated indexing adjustments for the applicable dollar amounts used to calculate ESRP under IRC §4980H(a) and §4980H(b)(1). Applicable large employers should review these updated figures when projecting potential ACA penalties.

IRS guidance on qualified long-term care distributions from retirement plans

Notice 2026-33 provides guidance on qualified long-term care distributions under IRC §401(a)(39), including disclosure and reporting requirements for certified long-term care insurance issuers, safe harbors for plan administrators, and an extended deadline for plan sponsors to amend eligible retirement plans. Primarily affects plan administrators and issuers of certified LTC insurance.

2026 Cumulative List for defined benefit pre-approved plans (Cycle 4)

Notice 2026-34 sets out the 2026 Cumulative List of plan qualification requirement changes for defined benefit pre-approved plans. The Cycle 4 submission window opens August 1, 2026 and closes July 31, 2027. Relevant primarily for plan providers submitting opinion letter applications to the IRS.

Educational assistance programs — IRS FAQ updated (Fact Sheet 2026-10)

The IRS updated its FAQ on §127 educational assistance programs. The $5,250 annual exclusion from gross income remains unchanged for 2025 and 2026. Under current legislation, the exclusion amount will be adjusted for cost-of-living increases starting in tax years after 2026. No action required for employers already administering §127 programs at the current limit.

IRS Business Tax Account expanded to partnerships, tax-exempts, and government entities

The IRS announced (IR-2026-46) the expansion of its Business Tax Account online platform to partnerships, federal/state/local governments, Indian tribal governments, and tax-exempt organizations. Previously available only to sole proprietors, S corps, and C corps. Affected entities can now access tax account information and perform common tasks digitally rather than by phone or mail.

Note: This information is for informational purposes only and does not constitute formal tax, legal, or compliance advice. Always consult with qualified tax advisors, legal counsel, and your organization's internal teams for guidance specific to your situation. Additional regulations may apply. For the most accurate and up-to-date information, refer to official government resources and regulatory agencies.