Navigating Federal 2026 HR Changes: A Guide for Nonprofits and Startups
- Cecilia Machuca
- Dec 19, 2025
- 4 min read
Updated: 10 hours ago
Understanding the Changes
As we navigate the evolving landscape of HR regulations, it’s crucial to stay informed. The changes in 2026 will impact how we manage our workforce. This guide will help you understand the key regulations and what actions you need to take.
Federal Minimum Wage Changes
FLSA – Federal minimum wage (DOL)
Federal minimum wage remains $7.25/hr; state/local rates may be higher and must be followed.
Applicability: Any employer with non-exempt employees, especially nonprofits/startups with hourly and multi-state remote workforces.
HR Action Checklist: Build or refresh a state & local wage map for every employee work location. Update offer letter templates and timekeeping rules. Ensure payroll is geo-aware for remote hires.
Retirement Plan Limits
Qualified retirement plan limits for 2026 (IRS)
2026 indexed limits (e.g., §415 limits) update plan administration. This impacts plan testing, employer contributions, and compensation limits.
Applicability: Employers sponsoring 401(k)/403(b)/pension; many nonprofits with 403(b) and startups with 401(k).
HR Action Checklist: Confirm recordkeeper has loaded 2026 IRS limits; update payroll deduction caps. Refresh employee communications for January elections. Confirm the plan document amendment calendar.
Roth Catch-Up Rule
Mandatory Roth catch-up rule (SECURE 2.0) – final regs (IRS)
After the transition period ends 12/31/2025, plans must operationalize the Roth catch-up requirement for higher-wage employees for tax years beginning after 12/31/2025.
Applicability: Employers with 401(k)/403(b)/457(b) catch-up features; especially organizations with experienced or highly compensated technical or clinical leaders (biopharma/med-device).
HR Action Checklist: Confirm payroll can identify prior-year wage thresholds and route catch-ups to Roth. Align plan terms with the recordkeeper. Update employee education and ensure the error-correction process is documented.
HSA Contribution Limits
HSA contribution limits for 2026 (IRS)
2026 HSA contribution limits update (and related HDHP parameters).
Applicability: Employers offering HDHP/HSA (common in startups); nonprofits offering HDHP options.
HR Action Checklist: Update payroll HSA caps and employer seed/match strategy. Confirm vendor limits and update open enrollment and total rewards documents.
HDHP / HSA Plan Design Parameters
HDHP / HSA plan design parameters (IRS Rev. Proc.)
Defines 2026 HDHP minimum deductible and out-of-pocket maximum parameters used in plan design and compliance.
Applicability: Any employer sponsoring an HDHP; critical for startups optimizing premium vs. deductible tradeoffs.
HR Action Checklist: Validate 2026 HDHP configuration with broker/TPA. Confirm plan documents, SBCs, and carrier renewals reflect indexed parameters.
ACA Affordability Percentage
ACA affordability % for plan years beginning in 2026 (IRS Rev. Proc.)
The indexed affordability percentage for 2026 plan years is updated. This is used for §4980H affordability safe harbors.
Applicability: Applicable Large Employers (50+ FTE) and growth-stage nonprofits/startups approaching ALE status.
HR Action Checklist: Re-run affordability testing (Rate of Pay / W-2 / FPL). Adjust employee contribution strategy and confirm measurement/stability periods for variable-hour workforces.
AI in HR Decisions
AI in HR decisions — EEOC role & risk framing (EEOC)
The EEOC highlights how AI and automated tools can trigger discrimination risk under federal EEO laws.
Applicability: Any organization using AI or algorithms for recruiting, selection, promotion, performance, scheduling, and monitoring; common in high-growth startups.
HR Action Checklist: Establish AI-in-HR governance. This includes adverse impact testing, vendor due diligence, documentation of job-relatedness, accessibility/ADA reviews, and human-in-the-loop controls.
EEOC Strategic Enforcement Plan
EEOC Strategic Enforcement Plan FY 2024–2028 (EEOC)
Enforcement priorities explicitly include increasing the use of technology/AI in employment decisions.
Applicability: All employers; higher exposure for fast-scaling, distributed teams and high-volume recruiting.
HR Action Checklist: Align HR controls to the enforcement posture. Validate selection procedures, standardize interview rubrics, and retain data for defensible decisions.
NYC Automated Employment Decision Tools
NYC Automated Employment Decision Tools (AEDT) (NYC DCWP)
NYC restricts the use of AEDTs unless bias audit and notice requirements are met.
Applicability: Any employer hiring or promoting employees who work in NYC (including remote roles tied to NYC).
HR Action Checklist: Inventory recruiting tools. Obtain a compliant bias audit, publish required disclosures, and update candidate notices and data retention.
DEI Program Risk Posture Shift
DEI program risk posture shift for 2026 (EEOC enforcement context)
There is a reported shift toward aggressive scrutiny of certain DEI practices as potential Title VII discrimination risk.
Applicability: All employers; higher visibility organizations, federal contractors, and workplaces with formal DEI targets or quotas.
HR Action Checklist: Conduct a counsel-led DEI audit. Ensure programs are opportunity-expanding versus decision-determinative. Tighten documentation of non-discriminatory selection criteria and update manager guidance.
Conclusion: Building a Trust-Based Culture
By staying informed and proactive, we can navigate these changes effectively. This will help us build scalable, trust-based people and culture systems that drive intelligent growth and high performance globally. As we adapt to these regulations, remember that our goal is to create an environment where everyone can thrive.
In this journey, the phrase "trust-based people and culture systems" is essential. It emphasizes the importance of establishing a foundation of trust within our organizations. This foundation will not only help us comply with new regulations but also foster a positive workplace culture that attracts and retains top talent.
As we move forward, let’s embrace these changes and leverage them to enhance our organizational effectiveness. Together, we can create a brighter future for our teams and the communities we serve.
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