Compliance isn’t something employers can afford to revisit only at year-end. Throughout 2026, HR leaders have been navigating significant federal legislation, landmark Supreme Court rulings, and increased immigration enforcement—all of which carry real implications for payroll, hiring, and workforce compliance.

Whether your organization has 50 employees or 500, now is the time to review your HR processes and address potential compliance gaps before they become costly problems.

In this 2026 mid-year HR compliance update, we’ll cover the three biggest developments employers should be paying attention to—and the practical steps you can take now.

1. The One Big Beautiful Bill (OBB): What Employers Need to Know About Tips and Overtime

The One Big Beautiful Bill (OBB) introduces new tax reporting requirements that affect how employers handle tipped wages and overtime pay.

Tip Tax Exemption Requirements

Under OBB, only voluntary tips left by customers qualify for the new federal tax exemption. Mandatory service charges, automatic gratuities, and similar fees are not considered eligible tips.

For employers, this means payroll accuracy is more important than ever.

Employers should:

• Review payroll system configurations to distinguish voluntary tips from mandatory service charges.
• Verify that employees receiving tips are properly classified in tip-eligible occupations.
• Ensure occupation codes are accurately reported for W-2 preparation.
• Train payroll and HR teams on the updated reporting requirements.

These reporting standards represent a significant change, and employers should begin reviewing payroll processes now rather than waiting until year-end tax reporting.

Overtime Tax Exemption

OBB also introduces a tax exemption for certain overtime earnings. However, employers should note that only overtime required under the Fair Labor Standards Act (FLSA) qualifies.

Overtime paid voluntarily or under employer-specific policies may not be eligible for the exemption, making proper payroll configuration and documentation essential.

MP Tip: Work with your payroll provider to confirm your system correctly distinguishes eligible overtime earnings before year-end reporting.

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2. Supreme Court Decisions Are Reshaping Employer Compliance

Several U.S. Supreme Court decisions issued in 2026 could have lasting implications for employers.

Birthright Citizenship

In Trump v. Barbara, the Supreme Court declined to alter the current framework for birthright citizenship, meaning existing policies remain in effect.

Federal Agency Leadership

In Trump v. Slaughter, the Court ruled that the President may remove leaders of independent federal agencies without cause. While this decision does not immediately change employer obligations, it could significantly influence how federal agencies establish and enforce workplace regulations moving forward.

Temporary Protected Status (TPS)

One of the most immediate compliance concerns involves Temporary Protected Status (TPS).

In Mullin v. Department of Education, the Court affirmed the President’s authority to establish expiration dates for TPS designations.

Current TPS expiration dates include:

• Haiti – July 24, 2026
• El Salvador – September 9, 2026
• Ukraine – October 19, 2026
• Sudan – October 19, 2026

Employers with workers authorized under TPS should review employment authorization documentation immediately and prepare for upcoming reverification requirements.

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3. Immigration Enforcement Is Increasing: Why Employers Should Audit I-9 Forms Now

Although immigration enforcement may not be making daily headlines, workplace enforcement activity continues to increase.

For employers, the best defense is proactive compliance.

Conducting an internal Form I-9 audit can help identify errors before they become costly during an ICE inspection.

Your I-9 audit should include:

• Reviewing all employee I-9 forms for completeness.
• Confirming required signatures are present.
• Identifying expired employment authorization documents.
• Tracking employees requiring reverification.
• Correcting technical errors using proper USCIS procedures.
• Ensuring documentation is organized and easily accessible if requested during an audit.

Employers should also pay close attention to employees affected by upcoming TPS expiration dates to avoid unintended employment authorization issues.

Waiting until an audit notice arrives is rarely the best time to discover compliance gaps.

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2026 Mid-Year HR Compliance Checklist

As you prepare for the second half of the year, use this checklist to strengthen your compliance efforts:

• Review payroll settings for OBB tax changes.
• Verify tip-eligible occupation codes.
• Confirm overtime reporting aligns with FLSA requirements.
• Conduct an internal I-9 audit.
• Track upcoming TPS expiration dates.
• Review employment authorization reverification procedures.
• Train HR and payroll teams on recent compliance changes.
• Schedule a year-end compliance review before 2027.

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Stay Ahead of HR Compliance Changes with MP

Employment laws continue to evolve, and keeping up with every legislative update, court ruling, and regulatory change can quickly become overwhelming. The organizations that stay compliant are the ones that take a proactive approach—not just reacting when new requirements take effect.

At MP: Wired for HR, we help employers simplify compliance through expert HR consulting, payroll administration, and technology designed to reduce risk while improving operational efficiency. Whether you need guidance on payroll reporting, I-9 compliance, workforce documentation, or broader HR strategy, our team is here to help.

Need help navigating today’s compliance landscape? Contact MP to schedule a compliance review and ensure your organization is prepared for whatever comes next.

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