As 2025 approaches, many states are introducing significant payroll updates. These updates will impact employers and employees alike. They range from new paid leave policies to increased payroll contribution rates. Thus, staying informed is key to maintaining compliance and supporting your workforce.
Key State Payroll Updates for 2025
California: Paid Family Leave
Starting in 2025, Assembly Bill 2123 removes the requirement for employees to use accrued vacation time before accessing Paid Family Leave benefits. This change offers greater flexibility for employees needing time off for family care.
Washington: Paid Family and Medical Leave
Washington’s Paid Family and Medical Leave total premium rate will increase to 0.92% of wages up to the Social Security cap of $176,100. Employers are responsible for 28.48% of the premium. Meanwhile, employees cover the remaining 71.52%. Employers should adjust payroll systems to reflect this change.
New York: Paid Family Leave
Contributions to New York’s Paid Family Leave program will rise to 0.388% of an employee’s gross wages. The maximum annual contribution will be $354.53. Employers should communicate this update to employees to avoid confusion about paycheck deductions.
Maryland: Family and Medical Insurance
Payroll deductions for Maryland’s Family and Medical Insurance program will begin on July 1, 2025, ahead of its full launch on July 1, 2026. Employers must remit the first payment to the state by October 2025.
Michigan: Paid Medical Leave Act
Effective February 20, 2025, Michigan’s Paid Medical Leave Act requires employers with 50 or more employees to provide eligible workers with at least 40 paid medical leave hours annually. Employers should update policies and systems to comply with this new requirement.
Maine: Paid Family and Medical Leave
While Maine’s Paid Family and Medical Leave program begins in 2026, payroll withholdings will start on January 1, 2025 to fund the program. Contributions will be transferred to the Maine Paid Family and Medical Leave Fund.
Delaware: Paid Family and Medical Leave
Similarly, Delaware’s Paid Family and Medical Leave program will launch in 2026. However, payroll withholdings for the program start on January 1, 2025. Employers should plan ahead for these deductions.
Minimum Wage Increases
Nineteen states will increase their minimum wages effective January 1, 2025. Furthermore, three more states will implement changes in July and September. For detailed information about minimum wage regulations in your area, consult Paycor’s Guide to Minimum Wage by State.
Pay Transparency Laws
Starting in 2025, Illinois, Minnesota, and Vermont will require employers to include salary information in job postings under newly enacted pay transparency laws. Therefore, employers should ensure job advertisements are updated to comply with these regulations.
Preparing for Compliance in 2025
The diverse range of state payroll updates highlights the importance of proactive planning and adaptation. Automated Employee Systems (AES) has over 35 years of experience as certified Dayforce consultants. They can help your business navigate these changes seamlessly.
Contact AES Today
Ensure your payroll processes are ready for 2025. AES offers tailored solutions to manage compliance, streamline payroll, and support employee satisfaction. Contact us today to learn how we can assist with state payroll law compliance and optimize your HR operations.
Sources:
California https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240AB2123
Delaware https://labor.delaware.gov/delaware-paid-leave-is-coming/
Maine https://www.maine.gov/paidleave/
Maryland https://paidleave.maryland.gov/workers/Pages/home.aspx
Michigan https://www.michigan.gov/leo/bureaus-agencies/ber/wage-and-hour/paid-medical-leave-act
New York https://paidfamilyleave.ny.gov/2025
Washington https://paidleave.wa.gov/updates/