The U.S. Department of Labor is entering 2026 with a clear regulatory strategy: simplify compliance for employers while intensifying enforcement against serious labor violations.
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Speaking at the PayrollOrg Capital Summit, Wage and Hour Division (WHD) Administrator Andrew Rogers outlined the agency’s priorities, emphasizing a balanced approach that combines guidance with targeted enforcement.
According to Rogers, the division is working “to provide clarity and reduce uncertainty for American employers and workers,” while maintaining focus on key issues such as overtime violations, hazardous child labor, and H-1B compliance.
A central theme of the 2026 agenda is ensuring regulations clearly interpret existing laws rather than expanding them.
“Regulations should explain, clarify and implement statutory requirements such that workers, unions and employers know precisely what the law requires,” Rogers said. “Regulations should not expand or extend requirements beyond statutory limitations.”
One of the most closely watched developments is the proposed rollback of the 2024 independent contractor rule. The WHD is considering replacing it with an “economic reality test,” which evaluates whether a worker is economically dependent on an employer or operating independently.
Rogers highlighted two key determining factors: “the nature and degree of the worker control over the work” and “the opportunity for profit and loss.”
This proposed change would extend beyond the Fair Labor Standards Act to include laws such as the Family and Medical Leave Act and protections for agricultural workers, significantly broadening its impact.
He also reminded stakeholders of a critical deadline: “You have a 60-day comment period, which closes at 11:59 p.m. on April 28.”
In addition, the WHD is evaluating new guidance on joint employment—an area that could significantly affect payroll calculations when multiple employers share responsibility for a worker.
Meanwhile, overtime rules remain unchanged following legal challenges to the 2024 update. The agency continues to enforce 2019 thresholds, including $684 per week for salaried workers and $107,432 annually for highly compensated employees.
Beyond rulemaking, enforcement remains a cornerstone of the WHD’s strategy. Rogers described a dual-track system focused on resolving routine violations quickly while targeting more serious infractions.
In 2025, the division recovered nearly $260 million in back wages for over 175,000 workers—averaging “a little bit less than $1,500 per worker.”
Overtime violations continue to dominate enforcement activity. “Violations of overtime rules continue to be the most common, and it’s really not even close,” Rogers said, noting they account for “nearly 80% of all FLSA back wage violations.”
Child labor enforcement is another major focus, particularly in hazardous occupations. The agency concluded more than 950 cases in 2025, with significant penalties tied to dangerous work involving minors.
A new enforcement effort, Project Firewall, will target abuse within the H-1B visa program, reflecting growing scrutiny of labor practices involving highly skilled foreign workers.
Rogers also emphasized the importance of proactive compliance tools, including opinion letters and the WHD’s PAID (Payroll Audit Independent Determination) program.
“PAID is one of those rare programs that actually is a win, both for employees, employers and for taxpayers,” he said.
Several real-world payroll scenarios discussed during the session highlighted how nuanced compliance can be:
The WHD also acknowledged ongoing challenges with certified payroll reporting, particularly around fringe benefits and documentation requirements, and encouraged industry feedback.
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The 2026 outlook signals a regulatory environment where compliance complexity remains high, particularly for employers managing:
At the same time, the agency’s emphasis on clarity and self-audit programs suggests a willingness to support employers that actively seek compliance.
The Wage and Hour Division’s 2026 strategy reflects a continued effort to balance enforcement with guidance. While employers can expect stricter oversight in areas like overtime, child labor, and worker classification, the agency is also expanding tools to help organizations navigate these requirements more effectively.
For payroll professionals, staying ahead of regulatory updates—especially around contractor classification and wage calculations—will be critical in minimizing risk and ensuring compliance in the year ahead.
Originally reported by Christopher Wood, CPP, Checkpoint News in Thomson Reuters.
