Staying on top of payroll compliance is a critical part of managing a business, especially as new laws and regulations frequently bring updates to wage requirements, tax obligations, and other payroll processes. As we move through 2025, employers should be aware of changes in payroll laws that could impact their business operations. SolveHR is here to help you understand these updates and guide you in maintaining payroll compliance.

Why Payroll Compliance Matters in 2025

Complying with payroll laws is essential to avoid penalties, foster employee trust, and support smooth business operations. Changes in payroll laws can affect pay rates, tax withholdings, reporting, and benefits deductions, making it crucial for businesses to stay informed and proactive.

Key Payroll Law Changes for 2025

1. Federal and State Minimum Wage Increases
   • What’s Changing: While the federal minimum wage may remain the same, many states and localities are increasing their minimum wage rates in 2025. Some states are also indexing wages to inflation, resulting in periodic adjustments.
   • How It Impacts Businesses: Employers operating in multiple states need to track different minimum wage rates. Adjustments to wages, payroll systems, and budgets are often required.
   • SolveHR Tip: Regularly check for updates to minimum wage laws in the states where you operate. SolveHR can help automate wage updates in your payroll system to avoid compliance issues.
2. Overtime Eligibility and Exemption Thresholds
   • What’s Changing: The Department of Labor (DOL) may revise the salary threshold for exempt employees, impacting which employees are eligible for overtime pay.
   • How It Impacts Businesses: Employers will need to re-evaluate salaried employees who fall close to the new threshold. If employees fall below the new threshold, they may need to be reclassified as non-exempt and become eligible for overtime pay.
   • SolveHR Tip: Conduct a wage and hour audit to assess which employees may be affected by changes in the exemption threshold. SolveHR can assist with reclassification, payroll adjustments, and employee notifications.
3. Payroll Tax Updates
   • What’s Changing: Changes to Social Security and Medicare tax rates, as well as federal and state income tax withholding tables, are common each year.
   • How It Impacts Businesses: Employers must adjust payroll calculations for both federal and state payroll taxes to ensure accurate withholding and avoid penalties.
   • SolveHR Tip: Update your payroll software to reflect current tax rates. SolveHR can help you stay current with these updates and provide support to streamline payroll adjustments.
4. New Reporting Requirements for Employee Benefits
   • What’s Changing: Some states are implementing additional reporting requirements for employee benefits, especially regarding retirement and healthcare plans.
   • How It Impacts Businesses: Employers may need to adjust reporting practices, particularly for ACA compliance, to accurately track and report employee benefits offerings.
   • SolveHR Tip: Ensure your HR and payroll systems capture the necessary data for benefits reporting. SolveHR can assist with ACA reporting and other compliance needs to help you stay organized.
5. Updates to Paid Sick Leave and Family Leave Deductions
   • What’s Changing: As paid sick leave and family leave programs expand in various states, deductions and contributions from employees and employers may also change.
   • How It Impacts Businesses: Employers may need to update payroll deductions for these state-mandated programs, adjusting contributions to meet new requirements.
   • SolveHR Tip: Review state-specific sick and family leave requirements, especially if you operate in multiple states. SolveHR can ensure that your payroll processes reflect these changes accurately.
6. Enhanced Penalties for Payroll Non-Compliance
   • What’s Changing: Both federal and state agencies are increasing enforcement of payroll compliance, with higher penalties for wage-and-hour violations.
   • How It Impacts Businesses: Non-compliance with payroll laws can result in costly fines, especially for repeat offenders. Payroll audits and accurate records are essential to avoid penalties.
   • SolveHR Tip: Conduct regular payroll audits and keep comprehensive payroll records. SolveHR can guide you in setting up processes that minimize the risk of non-compliance.

Preparing for Payroll Compliance in 2025

1. Perform a Payroll Compliance Audit
   • Why It Helps: A payroll compliance audit identifies areas where payroll practices may not align with current laws, allowing you to address potential issues before they result in penalties.
   • SolveHR Tip: Schedule an annual payroll audit with SolveHR to review wage rates, classifications, tax withholdings, and benefit deductions. This proactive approach keeps your payroll in compliance.
2. Update Payroll Policies and Employee Handbooks
   • Why It Helps: Payroll policies outline procedures for pay calculations, overtime, and deductions. Having clear, updated policies can help ensure consistency and transparency with employees.
   • SolveHR Tip: Work with SolveHR to update your payroll policies and employee handbook, incorporating any new payroll laws and compliance practices for 2025.
3. Train HR and Payroll Staff on New Regulations
   • Why It Helps: Payroll and HR teams need to be fully informed of changes in wage laws, tax requirements, and employee classification standards.
   • SolveHR Tip: Schedule training sessions to cover recent payroll updates. SolveHR offers resources and support to ensure your team is prepared for payroll law changes.
4. Utilize Payroll Software to Streamline Compliance
   • Why It Helps: Modern payroll software can help manage minimum wage updates, calculate overtime, and track tax rates across different states, making compliance easier.
   • SolveHR Tip: If you don’t already use payroll software, consider implementing a solution to reduce administrative burdens and improve accuracy. SolveHR can recommend and assist with payroll technology that meets your business’s compliance needs.
5. Consult with Payroll Compliance Experts
   • Why It Helps: Payroll compliance is complex, especially for multi-state employers. Consulting with payroll experts can ensure your business meets all legal requirements.
   • SolveHR Tip: Partner with SolveHR for payroll compliance expertise. We can review your payroll practices, recommend best practices, and provide ongoing support to keep your business compliant in 2025.

How SolveHR Can Help You Navigate Payroll Law Changes

SolveHR offers comprehensive payroll and compliance support to help businesses navigate payroll law changes. Our team stays up-to-date on payroll regulations, providing you with timely updates, assistance with payroll processes, and guidance on staying compliant across states. From policy updates to payroll audits, SolveHR is your partner in managing payroll efficiently and accurately.

Conclusion

Payroll law changes in 2025 require businesses to stay vigilant, proactive, and informed. By preparing now and adjusting payroll policies and practices, employers can stay compliant and avoid costly penalties. Contact SolveHR today for expert guidance on payroll compliance and support for your business’s evolving payroll needs.