Connecticut’s 2026 Employment Law Shift: What Employers Must Prepare For

As we prepare to end 2025 and move into 2026, ARI wants to ensure that all of our clients are aware of some upcoming legislation in the State of Connecticut as well as the new federal contribution limits for certain benefit plans.

Connecticut Paid Sick Leave Expansion:

Employers with 11 to 24 employees (as of 12/31/25) will soon be covered under Connecticut’s expanded Paid Sick Leave law.  Impacted businesses should review and update policies, payroll systems, and employee communications to ensure they align with the new requirements. The law covers nearly all private sector employees, except for seasonal employees and construction workers employed by exempted employers. It also covers temporary workers excluded from the prior law (unless they are seasonal employees). Under the law, “seasonal employees” are employees who work 120 days or less in any year.

• Jan 1, 2026 → employers with 11+ employees
• Jan 1, 2027 → all employers with at least one employee

Remember, under the expanded law:

• Eligible employees must accrue paid sick leave at a rate of at least 1 hour for every 30 hours worked, up to 40 hours annually.
• The definition of “family member” is broadened (to include siblings, grandparents, grandchildren, in-laws, etc.), and the permissible uses of leave are expanded (e.g., closures due to public health emergency, or exposure risk)
• Certain employer practices are restricted: for example, employers will not be able to require an employee to find a replacement while on leave and employer cannot require medical documentation for the first 40 hours of sick time used.
• Recordkeeping obligations: employers must maintain records of hours worked, leave accrued, and leave used, for at least three years.

Also remember the expanded permitted uses of sick time:

• For preventative medical care for an employee’s or family member’s physical or mental health;
• For medical diagnosis, care, or treatment of an employee’s or family member’s mental or physical illness, injury, or health condition;
• For an employee’s or family member’s illness, injury, or health condition;
• For a mental health wellness day;
• When an employer’s place of business or a family member’s school or place of care is closed by a public official’s order due to a public health emergency;
• When the employee or a family member poses a risk to other’s health due to exposure to a communicable disease, regardless of whether they contracted it (as determined by an appropriate health authority, a health care provider, or the employee’s or family member’s employer); or
• The employee or a family member is a victim of family violence or sexual assault and needs leave to do certain things (such as getting care or counseling, relocating, or participating in civil or criminal proceedings).

Action Items: Employers should verify employee headcount of greater than 11 employees as of 12/31/25; if you will cross the threshold mid-year, apply PSL as soon as you reach 11. Ensure your payroll system or HRIS is configured for appropriate accrual of 1 hour for every 30 hours worked and 40, enable carryover up to 40 hours (or frontload the hours to avoid the carryover provisions). Set a 120-day usage waiting period for new hires. Update onboarding materials and acknowledgement forms. Engage your ARI HR team member to assist with training supervisors on prohibited retaliation and on approving/denying paid sick leave neutrally.

Minimum Wage Increase & Impact on Paid Leave Benefits / Calculations:

On January 1, 2026, Connecticut’s minimum wage will increase to $16.94/hour.

This increase will push up corresponding benefit maxima (e.g. weekly benefit caps in state paid leave programs), as follows:

• Paid Family & Medical Leave (“PFML”) Program – Benefit Maximum Increase:

As of January 1, 2026, the new weekly maximum benefit under Connecticut’s Paid Leave / PFML program will be $1,016.40 (capped at 60 × the state minimum wage) for eligible claims.

Action Items: Employers should update pay rates below $16.94 by the first payroll of 2026; review wages rates for pay compression and adjust near-minimum roles; and check any internal “minimum starting rate” language in job postings and offer templates.

Earned Wage Access:

Public Act 25-155 established various requirements concerning earned but unpaid wage or salary income advances. Earned Wage Access (EWA) are advances of money on future wages or salary to employees that have been earned but not yet paid. EWA products are a way for workers to have access to their wages before payday.

Advances by Third-Party EWA providers are voluntary arrangements between workers and the EWA providers. With this arrangement, the advance is sought by the employee directly without involvement of the employer. They are outside the jurisdiction of the Connecticut Department of Labor (CTDOL). CTDOL does not have jurisdiction over EWA providers.

Advances by Employers, however, may implicate several Connecticut wage statutes, because of our jurisdiction over the employer/employee relationship. This arrangement is often referred to as “Employer Integrated” EWA. In situations where the employer passes the fee along to the worker in the form of a payroll deduction, the employer must obtain written authorization from the employee on a form approved by the Commissioner of Labor.

Action Items: Employers should ensure that if they are charging the fee associated with an EWA to the employee through a payroll deduction, that they obtain written authorization from the employee on the form approved by the CT DOL, found here: Authorization for Payroll Deductions | e-Delivery Project (ecourt.com). 

2026 Contribution Limits:

The IRS has announced the 2026 contribution limits for Flexible Spending Accounts (FSA), commuter benefits, and more. Here are the contribution amounts for 2026:

• Health FSA: $3,400 (Increased from $3,300).
• FSA Rollover: $680 (Increased from $660).
• Commuter (Parking and Transit): $340 per month (Increased from $325).
• Dependent Care: $7,500 for single taxpayers and married couples filing jointly or $3,750 for married people filing separately.
• Qualified Small Employer HRA: $6,450 for individuals and $13,100 for families.
• HSA Limits (Announced Previously): $4,400 for individuals and $8,750 for families.

Action Items: Employers should ensure that all employees are aware of these new contribution limits and should contact their ARI HR partner with any questions.

Next Steps:

If you are an ARI HR client, your ARI HR team is available to review your Handbooks and policies to ensure compliance with these changes and to assist with all-staff communication. Please contact your ARI HR team member with any questions or for any guidance.

If you are not currently an ARI HR team client, we are happy to discuss the ways that ARI HR could provide value to your business!