The federal Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations, sick leave, or federal or other holidays. These benefits are matters of agreement between an employer and an employee (or the employee’s representative).

However, if employers choose to provide paid vacation or paid time off (PTO) to their employees, states have taken different approaches as to whether such time must be paid out upon an employee’s termination from employment. Some states consider paid vacation or PTO to be wages and require employers to pay out accrued, unused vacation or PTO upon an employee’s termination. Other states may take different approaches (such as leaving the payout decision to employer policy) or may not address the issue at all.

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As artificial intelligence (AI) and emerging technologies rapidly transform the workplace, employers face a critical question: Are their teams ready for what’s next? In many industries, the answer is “not yet.” While companies embrace digital transformation, many employees remain underprepared to work alongside advanced technologies like artificial intelligence (AI) that change monthly or even weekly. It presents a strategic challenge for company leaders and a significant opportunity: By closing the AI and tech skills gap from within, organizations can improve performance, retain talent, and future-proof their workforce.

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U.S. employers are forecasting average wage increases of 3.5% in 2026, consistent with 2025 levels. A recent survey, which polled over 1,500 employers in the United States, showed that 53% plan no change to their salary increase budgets, while 31% expect to reduce them. Only 15% anticipate budget increases, signaling a continued shift toward cautious compensation planning even as overall wage growth holds steady.

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Question: Are companies required to have an employee handbook?

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We recently released our 3rd quarter HR Edge newsletter. This edition of the newsletter covers the following topics:

1. 2025 Midyear Attraction and Retention Strategies
2. How AI is Changing the Workplace
3. Improving Mental Health Utilization

Click here to read HR Edge (Q3 2025).

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Colorado Enacts Significant Wage and Hour Amendments – On May 22, 2025, Colorado enacted House Bill 1001, which makes several important changes to the state’s wage and hour laws.

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Employee engagement refers to an employee’s emotional connection and commitment to their organization and its goals. It is often reflected in their loyalty, motivation, and willingness to advocate for the organization. Engagement is a critical factor in driving retention and productivity.

According to a report from Gallup published in early 2025, the percentage of engaged employees fell to 31% in late 2024 from 33% in 2023. It was the lowest level of employee engagement recorded in a decade. Previous years saw high levels of employee quits, while employees are now more likely to stay in their current jobs—even if they are not satisfied with their role or their employer. This means employers may face lower productivity and a damaged workplace culture, which can lead to attraction and retention difficulties.

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On July 4, 2025, President Donald Trump signed a major tax and spending bill, commonly referred to as the “One Big Beautiful Bill Act” (OBBB Act), into law. The OBBB Act includes changes for employee benefit plans, including provisions that:

• Expand the availability of health savings accounts (HSAs);
• Permanently extend the telehealth exception for high deductible health plans (HDHPs);
• Increase the maximum annual limit for dependent care flexible spending accounts (FSAs);
• Allow employers to help pay employees’ student loans beyond 2025 and make cost-of-living adjustments to the tax exclusion for educational assistance programs; and
• Allow employers to contribute up to $2,500 per year to a new type of tax-advantaged account for children, called a “Trump Account.”

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Throughout 2025, there have been significant changes in employment law at the federal and state levels. A review of agency guidance, presidential executive orders, litigation, and recent and proposed legislation reveals a number of emerging trends that will affect employers for the remainder of the year. Employers should ensure that they are apprised of significant legal developments and are either in compliance or prepared to comply with their requirements.

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Question: Does an employer legally need to provide something in writing to an employee being terminated?

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