Mid-Quarterly HR Update – July 2025

Yes, there’s more! We did just send out a Quarterly Update last month, but there is enough going on that we wanted to send out a Mid-Quarterly Update to ensure we are helping everyone stay as up-to-date as possible.

Please see below and reach out to HRT for help.

Legal Updates & Info

Under Federal Law…

One Big Beautiful Bill Act: Here is a quick rundown of a couple elements of the OBBBA.

Federal Tax: Effective for the 2025 through 2028 tax years, there will be no federal taxes on qualifying overtime and qualifying tips. It’s a lot to breakdown so we are relying on this comprehensive article from Littler for the details.
Heath Spending Accounts (HSA): HSAs are being expanded to allow more flexibility in how the pre-tax money is used, with one major change being the permanent allowance of seeking telehealth coverage before the deductible applies for HSA-compatible plans. And, as of 2026, there will be additional changes related to the use of HSA funds for direct primary care (DPC) arrangements and increased accessibility for individuals on the ACA Marketplace to secure an HSA. Your broker is the best source of information for this topic.
Dependent Care FSA Increase: The annual limit that an employee is able to contribute to their dependent care flexible spending account (DCFSA) will increase from $5,000 to $7,500, effective for the 2026 plan year. Besides a temporary increase during the pandemic, this is the first increase to the annual contribution limit since 1986! (Fun fact, minimum wage in 1986 was $3.35 per hour!)
Increased Immigration Enforcement: Per this Fisher Phillips article, with a significant increase to the Immigration & Customs Enforcement (ICE) budget for enforcement and deportation operations, ICE is expected to increase their workplace audits and I-9 inspections, with a focus on certain industries such as agriculture, construction, hospitality, retail, and manufacturing. Employers are encouraged to conduct an internal audit of their Form I-9s to help ensure compliance.

Under Washington Law…

PFML (Paid Family Medical Leave) Amendments: In our June 2025 Quarterly Update we shared PFML changes coming in 2026. These are included in the state’s budget and confirmed for the effective date of January 1, 2026! Details are outlined in our prior article and include changes to job restoration rights, stacking of job-protected leave, benefits continuation and minimum claim duration. We recommend reviewing your current policy and making changes prior to January. Reach out to HRT to update your handbook and leave processes!

Fair Chance Act Amendment: The Fair Chance Act, sometimes referred to as “Ban the Box”, was passed back in 2018 and placed parameters around an employer’s ability to inquire about a candidate’s criminal history, prohibiting such inquiries during the initial stages of the application process. House Bill (HB) 1747 amends the Act and is effective July 1, 2026 for employers with 15 or more employees (and January 1, 2027 for employers with fewer than 15). HB 1747 will require employers to wait until after extending a conditional job offer before inquiring about or asking questions about criminal history. If an employer decides to take adverse action on a candidate after learning about their criminal history (after the conditional job offer), there are specific notification requirements an employer must meet. HRT can provide more detailed information on those requirements if needed.

In addition, the Amendment prohibits employers from: having policies or actual practices that automatically exclude individuals with criminal records; rejecting someone because they didn’t share information before a conditional offer was made; taking adverse actions in situations relating to juvenile convictions, arrest records, non-legitimate business reasons, or without following required notification requirements.

Driver’s License Requirement Limitations: It’s not uncommon for employers to require an employee to have a valid driver’s license as a condition of employment – that requirement is frequently seen in job postings for an advertised position. Senate Bill (SB) 5501, which was recently passed, will limit an employer’s ability to have such a requirement. Effective July 27, 2025, as outlined in the Final Bill Report, “Unless driving is one of the essential job functions or is related to a legitimate business purpose for the position, it is unlawful to: require a valid driver’s license as a condition of employment; or include a statement in a job posting for a job opening that an applicant must have a valid driver’s license.” SB 5501 does not provide a specific definition of “essential job functions” or “legitimate business purposes”, but does reference the Americans with Disabilities’ Act (ADA) in terms of “essential job functions”. We recommend using reasonable judgment when deciphering those terms; contact HRT to help assess specific situations.

Domestic Violence Leave Act Expansion: Washington Domestic Violence Leave Act has been in place since 2008, providing reasonable leave from work to employees (or the employee’s family member) who are victims of domestic violence and stalking. Senate Bill (SB) 5101, which is effective January 1, 2026, will expand protections under the Act to victims of “hate crimes”. Per the Final Bill Report, a “hate crime” means an assault, damage or destruction of property, or threat committed because of a person’s perception of another person’s specified characteristics, including race, gender, or religion. Hate crimes also include offenses committed online.

Under Oregon Law…

Age-Related Inquiries & Hiring: Like Washington, Oregon also has some new requirements in House Bill (HB) 3187 related to what information can be gathered during the hiring process. HB 3187 focuses on age-related inquiries. Likely to be effective September 28, 2025 (i.e. 91 days after the current legislative assembly adjourns), HB 3187 will prohibit employers from asking applicants who have not yet received an initial interview, for information related to their age, date of birth, or when the applicant attended or graduated from any educational institution. The law does provide exceptions for BFOQs (bona fide occupational qualifications) but it is extremely narrow. And, it is important to note, there is no violation of the new law if a candidate voluntarily provides the information on a resume.

Prior to the September effective date, we recommend reviewing and revising your application forms, removing any fields that inquire about the now prohibited information.

Payroll Process Transparency: We’ve seen a lot of states enact laws related to pay transparency in the hiring process. Oregon’s new law, Senate Bill (SB) 906 will amend payroll laws, requiring more transparency for Oregon employers to disclose specific information to new employees about their payroll practices.

Effective January 1, 2026, new Oregon employees must receive, via written document, the following information:

Regular pay period dates
Pay rates the employee may be eligible for and a description and definition of all payroll codes used for pay rates and deductions
All benefit deductions and contributions, as well as employer-provided benefits that may appear on an employee’s paystub
All deductions that may apply and the purpose of deductions that may be made
Allowances claimed as part of minimum wage

That is a significant amount of information! Now for the good news – Oregon’s BOLI (Bureau of Labor & Industries) is required to provide a model compliance template that employers can use as a starting point. It’s also expected that the information can be provided to employees by physically posting the information in a shared workspace area or via a website link, as opposed to providing a physical customized document to each individual employee.

HRT Northwest: Your Northwest HR Team

(253) 642-7372 | info@hrtnorthwest.com

This Update is not a full overview of all recent or upcoming legal changes. HRT Northwest is staffed by professionals in the field of Human Resources and business management. We are glad to help with your HR needs; however, we do not offer legal advice and our services are not a substitute for the help of a qualified attorney.