January 2026
Last month, we highlighted the Oregon and Washington employment law changes that went into effect on January 1, 2026. This is a quick reminder to double-check that you are in compliance with these updates.
Below is a brief compliance checklist. For more in-depth details, please refer back to our December NewsBrief Article.
OR Sick Leave for Blood Donation
OR Payroll Deduction Transparency
OR Workplace Violence Prevention (Healthcare employers only)
WA Domestic Violence Leave Act Expansion
WA Paid Family & Medical Leave
WA Minimum Wage Increases
WA Exempt Salary Threshold Increase
WA Expanded Isolated Worker Protections (industry specific)
Cascade Compliance Team
compliance@cascadeemployers.com
In early and late November 2025, the Internal Revenue Service (IRS) published additional guidance regarding federal tax deductions for tips and overtime wages under the One Big Beautiful Bill Act (OBBBA).
As a reminder, the OBBBA was signed into law in July of 2025 and amended the federal income tax code to reduce the amount employees owe on tips and overtime wages. These changes apply retroactively from January 1, 2025, through the 2028 tax year. The key provisions of OBBBA include:
No Tax on Tips: From 2025 through 2028, employees and self-employed individuals in IRS-defined tipped occupations may deduct up to $25,000 per year in qualified tips reported on a W-2 or 1099. The deduction phases out for individuals with adjusted gross income over $150,000 (or $300,000 for joint filers).
No Tax on Overtime: From 2025 through 2028, individuals may deduct up to $12,500 per year in qualified overtime compensation ($25,000 for joint filers), limited to the premium portion above base pay reported on a W-2 or 1099. The deduction phases out for individuals with adjusted gross income over $150,000 (or $300,000 for joint filers).
Guidance on Employer Reporting
Under OBBBA, employers are required to separately report the specific amounts of qualified tips and qualified overtime compensation on Forms W-2 or 1099. However, in early November, the IRS published guidance granting employers temporary penalty relief from these new reporting requirements for tax year 2025. Specifically, employers will not be penalized for failing to separately break out cash tips, identify occupation codes, or report total qualified overtime on 2025 forms, provided the rest of the tax return is complete and accurate.
Guidance on Employee Reporting
In late November, the IRS also published guidance regarding how eligible employees can calculate and claim overtime and tip deductions for 2025 under OBBBA. While not required, the IRS encourages employers to provide employees with separate information on qualified tips and qualified overtime compensation to help employees claim the 2025 deductions. This information can be provided through an online portal, a separate written statement, another secure method, or for overtime in Box 14 of Form W-2.
Oregon Tax Reminder
It is important to note that OBBBA’s no-tax-on-tips and no-tax-on-overtime provisions apply only to federal income tax and do not change state tax laws. Therefore, Oregon’s state income tax withholding on tips and overtime wages remains in effect.
Lindsay Hill, Director of Compensation Services
compensation@cascadeemployers.com
Setting pay for new hires is one of the most important decisions an organization makes because it shapes internal equity, market competitiveness, and long-term retention. To do this effectively, organizations need a clear, documented, and consistently applied process for how employees are placed within pay ranges and how they progress over time. This begins with a well-defined compensation philosophy and strategy, which outlines your organization’s goals for competitiveness, internal equity, transparency, and the specific criteria you use to differentiate pay such as experience, education, competencies, tenure, or performance. Clearly documenting these principles ensures that hiring managers and HR professionals make fair, aligned, and defensible starting pay decisions.
Your approach should also meet the requirements of federal and state laws, including the Oregon Equal Pay Act, which allows pay differences only when based on bona fide job-related factors such as education, training, experience, seniority, merit, and workplace location. Ensuring that pay-setting criteria are documented and applied consistently reduces legal risk and promotes internal equity.
As a general best practice, new hires are placed within a pay range based on how their qualifications compare to the job expectations. Candidates who meet only the basic qualifications or have minimal relevant experience usually start near the minimum of the range, because they need more time and support to reach full competence. Candidates with strong, relevant experience who are expected to become fully proficient quickly are commonly placed near the midpoint of the range, which generally reflects the market rate for full competence. Placement near the maximum is typically reserved for candidates with extensive experience, significant tenure in similar roles, or a demonstrated history of high performance, depending on your organization’s compensation philosophy.
Many organizations use objective tools to support consistency, such as a point factor template that assigns point values for education, years of experience, certifications, specialized skills, and other job-related factors. The total score maps to a part of the pay range, providing a transparent and compliant method for determining starting pay.
Additional best practices include using reputable market data to inform range structures, documenting the rationale for each starting salary decision, limiting the influence of negotiation to prevent inequities, communicating openly with candidates about how pay is determined, and reviewing your compensation policies regularly to keep them aligned with changing laws and market conditions.
If your organization needs compensation consulting support to build, refine, or implement a consistent and compliant approach to setting starting pay, we’re happy to help! Reach out to us today at compensation@cascadeemployers.com.
Cascade Compliance Team
compliance@cascadeemployers.com
Question: What is Washington State’s minimum wage?
Answer:
This depends on where the employee is working. Washington has a statewide minimum wage, but several cities and counties have adopted higher local minimum wages that apply based on the employee’s work location and, in certain jurisdictions, the employer’s size, revenue, and/or industry.
Washington State Minimum Wage
Effective January 1, 2026, the statewide minimum wage is $17.13 per hour. Workers who are 14 or 15 years old may be paid 85% of the minimum wage, or $14.56 per hour.
City and County Specifics Minimum Wages
Bellingham, Burien, Everett, King County (unincorporated areas), Renton, Seattle, SeaTac, and Tukwila have their own minimum wages.
Bellingham:
Burien:
Everett:
King County (unincorporated areas):
Renton:
Seattle:
SeaTac:
Tukwila:
By Sheryl Kelsh, Membership Development Manager
skelsh@cascadeemployers.com
Professional certification remains one of the most effective ways to stand out in today’s HR landscape. Certification through the HR Certification Institute (HRCI) remains the gold standard in HR excellence. Even better, your membership with Cascade Employers Association makes certification and recertification much easier (and less expensive).
What Cascade Members Receive
Cascade members can earn up to 12 HRCI Recertification Credits during each three-year renewal cycle simply by maintaining membership:
Members also receive a $50 discount on exam fees for PHR, SPHR, GPHR, aPHR, or PHRca certifications.
In addition, most Cascade training classes qualify for HRCI recertification credits, making it easier to stay certified while continuing to build practical HR skills.
Why Certification Matters
HRCI credentials are frequently listed as preferred or strongly desired in HR job postings.
According to PayScale:
Certification not only supports career growth, it positions HR professionals as trusted leaders and strategic partners.
How many HRCI credits can I earn through Cascade membership?
Up to 12 credits per three-year renewal cycle, depending on your credential and length of membership.
Do all certifications require Business credits?
No. Business credits apply to SPHR. For PHR, GPHR, and CA credentials, these credits default to HR General.
Do Cascade classes count toward recertification?
Yes! Most Cascade training programs qualify for HRCI recertification credit.
Which exams qualify for the Cascade discount?
PHR, SPHR, GPHR, aPHR, and PHRca exams are all eligible for the $50 member discount.
How do I request credits or get the exam discount code?
Easy. Contact Sheryl Kelsh. She has the code, the process, and the answers.
Bottom Line, HRCI certification strengthens your credibility, boosts earning potential, and positions you as a trusted HR leader. And with Cascade’s built-in credits, discounts, and qualifying training, staying certified is more manageable than ever.
