October 2026 HR Reveal. In this article, we review HR updates you should have on your radar as we move into the final quarter of 2026 your radar as we close out the first quarter of 2026.
According to data from the U.S. Bureau of Labor Statistics (BLS), wages and salaries cover roughly 70% of total employer costs, while benefits amount for the remaining 30%. However, this is an estimate and benefit costs range even higher for some employers based on benefit design.
A recent survey released by Business Group on Health predicts healthcare cost increases for 2027 at a median of 9.2%. Consulting firm Aon estimates employer healthcare costs will increase 9.5% in 2027, resulting in average spending above $19,000 per employee. These numbers are trending above 2026 increases.
With BLS data indicating that health insurance comprises the largest individual benefits expense for employers, these predictions certainly make headlines. As we look towards 2027, the year-over-year cost volatility has pushed many employers to closely evaluate health care strategies to proactively mitigate costs while avoiding detrimental impacts on outcomes.
Many employers utilize bonus payments, and the structure and type of these payments varies greatly across industries. Employers must keep in mind FLSA (Fair Labor Standards Act) requirements to properly calculate these payments for non-exempt employees.
While bonus payments may be an excellent option to reward employee contributions, they require careful review to stay in compliance with the FLSA requirement to recalculate overtime pay for certain types of payments. This requirement can be confusing and complex, so we cover just the basics as it pertains to these bonus calculations.
Regular Rate of Pay. The FLSA requires that most non-exempt employees be paid overtime at not less than time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. The regular rate of pay includes not only the hourly wage but also forms of compensation such as some bonuses. Hence, a correct calculation includes an understanding of the “regular rate” of pay concept under the FLSA.
A Discretionary v. Nondiscretionary Bonus. The next critical area of understanding is the difference between a discretionary and nondiscretionary bonus. As its name implies, with a discretionary bonus, the employer retains sole discretion over whether to make the bonus payment and if so, the amount. This type of bonus is excluded from the regular rate of pay. In contrast, a nondiscretionary bonus is a payment an employee expects due to pre-established goals, formulas, or promises. A nondiscretionary bonus must be included in the regular rate of pay and must be factored into overtime calculations.
HR Tip. Employers that provide bonuses to non-exempt employees should double check for a proper understanding of whether the payments are considered discretionary or nondiscretionary to ensure compliance with the FLSA. What’s at risk? Improper calculations expose employers to back pay, liquidated damages, interest, and legal fees.
DEED announced in July that so far almost 75,000 Minnesotans have been approved for PFML benefits, resulting in nearly $600 million in payments. The weekly payment was averaging around $1,083. This data is based on 126,373 unique applications with a claim approval rate of nearly 60%. DEED Commissioner Matt Varilek stated, “[t]he first six months of Paid Leave demonstrate that the program is operating smoothly and delivering on its promise”.
DEED reports PFML recipients are representative of the state’s workforce, including:
What to Expect in 2027. By July 31st of each year, Minnesota Paid Leave is responsible for setting the premium rate for the following calendar year. For 2027, the program announced the rate will stay at 0.88% (0.66% for small employers).
Income and Taxes. As we near the end of the first year of PFML payments, keep benefit taxation on your radar. According to information published on the Paid Leave website:
Minnesota rolled out a retirement program in 2026. Under this new plan, Minnesota employers with 5+ employees are (or will be) required to facilitate Secure Choice if they don’t already offer a qualified retirement plan for employees. Employers with 100+ employees were required to either enroll or certify their exemption by June 30th. Upcoming deadlines include:
Stay tuned for updates and consult with a trusted advisor to fully understand how these laws, trends, and priorities impact your organization.
Unsure how to navigate the complexities of employment law changes? Check out our recent blog post for tips and guidelines.
About the Author
HR Consultant, Stacy Johnston, provides innovative solutions with a mission to support organizations in understanding and engaging their biggest competitive advantage… their employees. Johnston is a licensed attorney in Minnesota and holds the SHRM-CP (Certified Professional) credentials.
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