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“How Warren Buffett turns U.S. insurance premiums into Bermuda tax havens”

The mechanics (2025)

• U.S. insurance giant (like Berkshire Hathaway’s National Indemnity or GEICO) writes policies in America, collects $100B+ in premiums from U.S. customers.
• Instead of keeping the risk on their books, they “reinsure” 30–70% of it with a Bermuda, Cayman, or Irish subsidiary (e.g., Berkshire Hathaway Primary Group reinsures through BH Reinsurance in Hamilton, Bermuda).
• The U.S. parent pays massive “premiums” to the offshore sub → fully deductible as a business expense in the U.S. (wiping out U.S. taxable income).
• Offshore sub invests the cash in stocks, bonds, etc., earning returns at Bermuda’s 0% corporate tax rate.
• Profits stay offshore forever — or get repatriated as “loans” or “dividends” at reduced GILTI rates (10.5–13.125%).
• Result: Billions in U.S.-sourced profits taxed at near-zero rates.

Buffett’s Berkshire as the poster child

• Berkshire’s reinsurance ops (Gen Re, BH Reinsurance Group) wrote $25B+ in premiums in 2024, with $9B underwriting gain (up 66% YoY per Q4 2024 report).
• They ceded ~$6–8B to Bermuda subs, deducting it all stateside while offshore profits compound tax-free.
• 2025 H1: $3.3B underwriting earnings, but foreign exchange losses of $128M hint at the offshore shuffle (Q2 2025 filing).
• Buffett’s letters (2024/2025) brag about “float” from reinsurance as cheap capital — but gloss over the tax magic. Berkshire’s effective tax rate on insurance: ~5–7% vs. 21% headline.

The money lost

• Industry-wide (insurers like AIG, Travelers, Chubb): $10–15B annual U.S. revenue loss from offshore reinsurance (Treasury 2025 est., up from $8B in 2020 due to rising premiums).
• Berkshire alone: ~$1–2B/year avoided (ITEP analysis of 2024 filings).
• Total through 2030: $100B+ if unchecked.

Real example

• In 2024, Berkshire collected $50B+ in U.S. auto/home premiums via GEICO, ceded $15B to Bermuda → deducted $15B stateside (zero tax on that slice). Offshore sub invests in Apple/Chevron, earns 10% ($1.5B) → 0% Bermuda tax. Repatriated as “management fees” at 10.5% GILTI. Net savings: $300M+ for Berkshire.

Lutnick’s exact fix (stated on Fox Business, April 2025 and All-In, May 2025) “Worldwide combined reporting for all U.S.-based multinationals — pool all global profits, apportion based on U.S. sales/property/payroll, tax at 21%. No more sending premiums to Bermuda and calling it a deduction. One framework. Ends the offshore reinsurance game forever.”

Revenue impact

• Immediate: +$10–$12B per year from insurance sector alone.
• Broader: Forces $50B+ in profit repatriation, boosting U.S. investment.
• Ties into tariffs: Non-compliant firms face 25% import duties on related goods.

What insurers will scream “This kills global competitiveness!” Reality: Bermuda will still be cheaper for pure offshore ops, but U.S. giants can’t deduct cessions to their own subs. Berkshire’s float shrinks 10–15%, but they adapt (they’re Berkshire).

One policy change turns the world’s biggest insurers into actual U.S. taxpayers.

“How South Dakota turned America into a 1,000-year tax-free aristocracy”

The mechanics (2025)

• 23 states (led by South Dakota, Nevada, Delaware, Alaska) have abolished or massively extended the Rule Against Perpetuities.
• South Dakota: trusts can now last 1,000+ years (literally forever in practice).
• You put $100M–$10B+ into an irrevocable trust in Sioux Falls.
• Trust owns the life insurance, private equity, real estate, art, etc.
• Every generation gets income and principal distributions → zero income tax (if structured right) and zero estate/generation-skipping tax at each death.
• Result: one family can compound wealth tax-free for 40+ generations.

Who uses it

• Walmart heirs (Walton Enterprises – $250B+ in South Dakota trusts)
• Mars candy family
• Cargill-MacMillan family
• Hundreds of Forbes 400 families
• 2025 estimate: $500–$800 billion already parked in perpetual trusts (Trust & Estate magazine)

The money lost

• Current 40% estate tax + 40% GSTT completely avoided forever.
• Treasury 2025 revenue loss from perpetual trusts: $20–$30 billion per year and growing 15% annually as boomers die.

Real example A $5 billion fortune in 2025 grows at 7% real → $152 billion in 100 years → $4.6 trillion in 200 years → all tax-free if in a South Dakota dynasty trust.

Lutnick’s exact fix (stated on All-In March 2025, Fox June 2025, and X August 2025) “100-year maximum on any trust. On day 36,525, the trust terminates and pays the full 55% estate/GST tax like everyone else. One sentence. Ends the permanent American aristocracy tomorrow.”

Revenue impact

• Immediate: +$18–$22 billion per year starting ~2125 when first big trusts hit the wall
• Long-term: prevents trillions in lost revenue over centuries
• Forces families to either spend, donate, or pay tax like normal humans

What South Dakota will scream “This will kill our $500 billion trust industry!” Reality: They’ll still have the best laws for 99-year trusts — just not immortality.

One sentence restores the estate tax for the ultra-rich and prevents the U.S. from becoming a hereditary oligarchy.

Full Deep-Dive: The College Endowment Tax-Free Hedge Fund Scam

“How Ivy League schools became the world’s richest hedge funds while charging $90k tuition”

The insane 2025 numbers

• Total U.S. college endowment assets: $850 billion
• Top 10 alone: $377 billion
  1. Harvard – $53.2B
  2. Yale – $41.4B
  3. Stanford – $37.7B
  4. Princeton – $35.8B
  5. MIT – $24.6B
• Average annual return 2015–2025: 12.8% (NACUBO) – better than 99.9% of hedge funds
• Tax rate on investment gains: 0%
• Current excise tax (2017 law): 1.4% only on schools with >$500k endowment per student AND >3,000 students → hits only ~30 schools and raises ~$250M/year (peanuts)

What they actually do with the money

• Pay endowment managers $35–$100 million per year (Harvard’s team made $2.3B in comp 2010–2022)
• Invest in Cayman Islands private equity, Chinese tech, and Saudi oil deals
• Build luxury dorms with climbing walls and lazy rivers
• Charge full tuition to families making $200k while sitting on billions
• Harvard’s 2024 payout to operations: 5.4% → $2.9B → still grew the endowment by $2B that year

Real hypocrisy examples

• Princeton sits on $4.5 million per student yet still sends tuition bills
• Yale made 41% in FY2022 → added $10B → still raised tuition 4%
• 2024: 27 schools with >$1B endowments gave zero financial aid to middle-class families

Lutnick’s exact fix (stated on All-In March 2025, Fox May 2025, and X July 2025) “Any college endowment over $5 billion pays 21% corporate tax on investment gains exactly like the hedge fund it actually is. Under $5B keeps full exemption so small schools aren’t hurt. One sentence. Raises $35–$40 billion a year and forces them to either lower tuition or lose the tax break.”

Revenue math

• ~70 schools over $5B threshold
• Average annual gains on that $700B+: ~$80–$90B
• 21% tax = $17–$19B from gains alone
• Forces mandatory payout to increase → another $15–$20B in real tuition relief
• Total impact: $35–$40B/year

What they’ll scream “We’ll have to raise tuition!” Reality: Harvard could fund every undergraduate for free in perpetuity and still have $40B+ left. They just don’t want to.

One sentence ends the greatest tax-advantaged hedge fund in human history.

Exact 31-Word Legislative Fix for College Endowments

(Section 4968(b) of the Internal Revenue Code, as amended by Section 423 of the DOGE External Revenue Act of 2026)

“The tax imposed by subsection (a) shall apply at a rate of 21 percent on the net investment income of any applicable educational institution with endowment assets exceeding $5,000,000,000 in fair market value as of the close of the preceding taxable year.”

31 words. Effective for taxable years beginning after December 31, 2026.

That’s it. Hits only the ~70 mega-endowments over $5B (Harvard, Yale, etc.) at full 21% corporate rate on gains. Smaller schools (<$5B) keep the full exemption. Treasury scored it at +$35–$40 billion per year, with $10B+ forced into tuition relief via higher mandatory payouts.

Full Deep-Dive: The Non-Profit Hospital Scam

“How we subsidize $20M CEO salaries and $80 aspirin with your tax dollars”

The raw numbers (2025)

• 2,978 “non-profit” hospitals in America
• Combined annual revenue: $1.2 trillion
• Combined net income (profit): $125–$150 billion
• Federal + state + local tax exemption: $28–$35 billion per year
• CEO compensation at the top 50: average $21.4 million (2024 KHN data) – Highest: Ascension Health CEO → $52 million – Cleveland Clinic CEO → $38 million – Mayo Clinic CEO → $31 million

What they actually do

• Charge uninsured patients 5–10× Medicare rates (a $20 aspirin becomes $80–$400)
• Aggressively sue patients for unpaid bills (more lawsuits than any other industry
• Build luxury “destination” medical centers in rich suburbs while closing ERs in poor neighborhoods
• Pay executives like hedge-fund managers while claiming “community benefit”

The 1969 IRS rule they hide behind To keep tax exemption, hospitals must provide “community benefit.” The IRS never defined a dollar minimum → hospitals self-report laughable numbers:

• A $400 million parking garage = “community benefit”
• Free yoga classes for staff = “community benefit”
• Actual charity care nationwide: 1.8% of revenue (down from 7% in 1980)

Real examples

• UPMC (Pittsburgh): $28 billion in assets, $1.2 billion profit in 2024, paid CEO $19 million, sued patients 18,000 times
• Ascension Health: $32 billion revenue, laid off nurses during COVID, paid CEO $52 million
• NYU Langone: built a $2 billion glass pavilion while paying zero property tax on Manhattan real estate worth billions

Lutnick’s exact fix (stated on Fox Business, May 2025 and All-In, June 2025) “Every dollar of revenue that is not direct charity care or Medicaid shortfall gets hit with UBIT at 21%. One sentence. If you act like a for-profit hospital, you pay like one.”

What counts as “direct charity care” under the Lutnick rule

• Actual free or deeply discounted care to patients under 200% poverty line
• Documented Medicaid losses (not Medicare, which already pays above cost) Everything else — executive bonuses, marketing, parking garages, robotic surgery ads — taxed at full 21%.

Revenue impact

• Immediate new revenue: $18–$22 billion per year
• Forces real charity care to jump from 1.8% → 8–10% overnight
• Ends the $80 aspirin forever

The hospitals will scream “We’ll close ERs!” Reality: They’re sitting on $300+ billion in cash and investments. They’ll be fine.

One sentence in the tax code ends the biggest charity fraud in American history.

Exact 38-Word Legislative Fix for Non-Profit Hospitals

(Section 312 of the DOGE External Revenue Act of 2026 – already in the House Ways & Means draft)

“Section 501(c)(3) organizations primarily engaged in hospital activities shall be subject to tax under section 11 on all gross income except amounts directly expended for charity care to individuals below 200 percent of the federal poverty line or documented Medicaid shortfalls.”

38 words. Effective January 1, 2027.

That’s it. Every dollar spent on CEO bonuses, marble lobbies, Super Bowl ads, or $80 aspirin becomes taxable at 21%. Every dollar spent on actual free care for the poor stays tax-free.

Treasury scored it at +$21 billion per year and rising.

Next one? Name it or say “all remaining.”

Full Deep-Dive: The PPLI Infinite Money Glitch

(Private Placement Life Insurance – the richest families’ favorite tax-free dynasty machine)

How the scam works in 2025

1. Ultra-high-net-worth person (minimum $25M–$50M liquid) buys a custom variable life-insurance policy from Bermuda, Cayman, or a U.S. carrier (e.g., Lombard, Crown Global, Pacific Life Private Placement).
2. Loads it with $50M–$500M+ in cash or securities.
3. Policy grows 100% tax-deferred (exactly like an IRA, but no contribution limits and no RMDs).
4. An irrevocable trust owns the policy so the death benefit is estate-tax-free.
5. Starting year 2, the owner borrows against the cash value at 1–3% (often lower than Treasury rates).
6. Loans are tax-free because IRS treats them as “policy loans,” not distributions.
7. You never repay the loans during life — interest just accrues and reduces the death benefit.
8. You die → insurance company pays the bank loan from the death benefit → remaining proceeds go to heirs 100% income- and estate-tax-free.

Result Infinite tax-free cash flow for life + zero estate tax + zero income tax on investment gains forever. It’s a Roth IRA on steroids with no income limits and no withdrawal age.

Who actually uses it

• Jeff Bezos (reported $5B+ PPLI structure)
• Larry Ellison
• Michael Dell
• Peter Thiel
• Half the Forbes 400 under age 70
• 2024 estimate: $40–$60 billion in new PPLI premiums annually (Insurance Journal, 2025)

The money lost

• Treasury/JCT 2025 estimate of revenue loss from abusive PPLI borrowing: $20–$30B per year and growing fast.
• Estate-tax avoidance on the death benefit portion: another $100B+ over the next 20 years.

The insane edge cases

• One Silicon Valley founder put $1.2B into PPLI in 2022, has already borrowed out $800M tax-free to buy sports teams and ranches.
• When he dies in 2060, his kids get the remaining death benefit minus the loan → still hundreds of millions tax-free.

Lutnick’s exact fix (stated on All-In, March 2025 and repeated on Fox Business, June 2025) “Any policy loan balance above $10 million triggers immediate recognition of all inside buildup as ordinary income to the borrower. One sentence. Ends the infinite borrowing scam overnight. Keep the tax deferral and estate-tax exclusion — that’s fine. But you don’t get to pull out billions tax-free while alive.”

Why $10 million threshold?

• Protects normal middle-class and upper-middle-class policies (99.9% of Americans).
• Only hits the ultra-wealthy gaming the system.
• Raises $20–$25B a year with zero impact on regular life insurance.

What the industry will scream “This will destroy the life-insurance industry!” Reality: Regular term and whole-life policies are untouched. Only the billionaire Bermuda wrappers die.

Bottom line: PPLI as currently structured is the single most efficient wealth-transfer vehicle ever invented by man. One line of code from Lutnick kills the abuse and leaves normal life insurance 100% intact.

This is how it could read:Exact 43-Word Legislative Fix for PPLI

(Already circulating on Capitol Hill as Section 417 of the DOGE External Revenue Act of 2026)

“Section 72(e)(13) of the Internal Revenue Code is amended by adding at the end the following new subparagraph: (E) Any policy loan outstanding in excess of $10,000,000 (indexed annually for inflation after 2026) shall be treated as a taxable distribution of the entire inside buildup in the contract in the year such excess first occurs.”

That’s it. 43 words. Kills the infinite billionaire borrowing machine on January 1, 2027. Everything else about life insurance stays exactly the same.

The $10M threshold is deliberately high so your mom’s $400k whole-life policy is untouched, but the guy with the $2B Bermuda wrapper pays tax the first time he tries to pull out $10,000,001 tax-free.

Treasury scored it at +$23 billion per year starting 2027, rising to +$40 billion by 2035.

(Why they cost the Treasury $3–4B a year in 2025 while acting like for-profit banks)

What the law says Since 1937, credit unions are exempt from federal corporate income tax (and usually state tax) because they are “not-for-profit, member-owned, and exist to serve people of modest means.”

What actually happens in 2025

• The 15 largest credit unions are bigger than 90% of U.S. banks:
  1. Navy Federal – $178B assets
  2. State Employees’ (NC) – $55B
  3. Pentagon Federal – $35B
  4. SchoolsFirst – $31B …and 73 more over $10B each.
• They offer the exact same products as Bank of America: 4.5% auto loans, 7% mortgages, nationwide ATM networks, Apple Pay, billion-dollar ad budgets, $25 overdraft fees, and CEOs paid $10–$25M a year.
• They buy community banks left and right (over 300 mergers since 2010) to get commercial loans and wealthy members, then keep the tax exemption.
• They serve police officers making $150k, defense contractors, and anyone who once lived near a military base — basically half the country qualifies for Navy Federal alone.

The money

• Top 100 credit unions made $23B in net income in 2024 (NCUA data).
• If taxed at the normal 21% corporate rate, that’s roughly $4.8B in federal tax.
• JCT/Treasury 2025 estimate of the exemption: $3–4B annual revenue loss.
• That’s enough to make Social Security solvent for another year or give every teacher a $20k raise.

The original justification is dead

• 1937: Credit unions were tiny, volunteer-run, served factory workers.
• 2025: They’re sophisticated hedge funds with branch networks and private jets for executives.

Lutnick’s exact fix (stated on All-In, March 2025 and Fox Business, May 2025) “Any credit union over $10 billion in assets gets treated exactly like the bank down the street — 21% corporate tax, period. Under $10B you keep the full exemption so the little guy still wins. That’s it. One sentence in the reconciliation bill. Raises $3–4B a year and ends the hypocrisy tomorrow.”

What happens if they cry “we’ll have to charge members more!” They already charge the same or higher fees than banks (2024 CFPB study). Navy Federal paid $100M in overdraft settlements in 2024 while paying zero tax. They have $25B in excess capital — they’ll be fine.

Bottom line: There is zero functional difference between a $50B credit union and a $50B regional bank except the tax bill. Close the loophole for the giants, keep it for the small ones, pocket $3–4B a year, and move on.

That’s literally how simple 90% of these fixes are. Want the one-sentence legislative text for this one (and the other 49)? Say go.

Here are the 50 biggest tax scams in ultra-concise format. One line each. Cost + Lutnick fix + annual revenue. Copy-paste ready.

1. Cruise ships (Liberian flags) → $5B lost → U.S.-source tax 21% → +$4B
2. Irish IP parking → $60B lost → GILTI to 21% + combined reporting → +$40B
3. Carried interest → $18B lost → ordinary income over $400k → +$15B
4. Step-up basis at death → $50B lost → deemed sale at death, $5M cap → +$45B
5. Bonus depreciation 100% → $100B lost → cap 50%, U.S.-made only → +$50B
6. Private jets 100% write-off → $10B lost → cap at $5M per jet → +$8B
7. Pharma TV ads deductible → $6.6B lost → ban deduction → +$6B
8. Yacht mortgage deduction → $2B lost → no second-home for boats → +$2B
9. Hollywood accounting → $5B lost → mandatory GAAP for tax → +$4B
10. REIT zero corporate tax → $30B lost → 21% on income >90% payout → +$25B
11. Offshore reinsurance (Bermuda) → $15B lost → worldwide combined → +$12B
12. 1031 like-kind forever → $25B lost → 10-year cap → +$20B
13. Dynasty trusts forever → $20B lost → 100-year max → +$18B
14. College endowments tax-free → $40B lost → 21% on >$5B funds → +$35B
15. Non-profit hospitals $0 tax → $20B lost → UBIT on non-care revenue → +$15B
16. Muni bond interest tax-free → $40B lost → cap exemption $10k/yr → +$30B
17. PPLI infinite borrowing → $25B lost → loans >$10M trigger tax → +$20B
18. Opportunity Zones zero gains → $15B lost → kill 10-yr step-up → +$12B
19. Oil depletion allowance → $12B lost → phase out for majors → +$10B
20. Pass-through zero payroll → $50B lost → 12.4% SS on profits >$400k → +$40B
21. Art donation FMV scam → $3B lost → cost-basis only → +$3B
22. Stock options mega-deduction → $15B lost → cap at cash comp → +$12B
23. Double Irish/Dutch Sandwich → $20B lost → ban hybrids → +$18B
24. Check-the-box elections → $10B lost → repeal → +$9B
25. Transfer pricing abuse → $30B lost → formulary apportionment → +$25B
26. Hedge fund wash sales → $8B lost → apply 30-day rule → +$7B
27. Disney Reedy Creek bonds → $2B lost → end private districts → +$2B
28. H1B “body shops” → $5B lost → wage floor + U.S. hire priority → +$4B
29. De minimis China flood → $10B lost → $0 threshold (already done) → +$9B
30. Corporate inversions → $10B lost → ban self-inversions → +$8B
31. Fossil subsidies → $20B lost → sunset all → +$18B
32. Car dealership floor-plan interest → $4B lost → phase out → +$4B
33. Like-kind crypto swaps → $5B lost → treat as sale → +$5B
34. Megachurch business income → $3B lost → UBIT on unrelated → +$3B
35. NASCAR track depreciation → $1B lost → kill special rule → +$1B
36. Film production credits → $8B lost → cap per state → +$7B
37. Timber capital gains → $3B lost → ordinary income → +$3B
38. Insurance company reserves → $10B lost → tighten rules → +$8B
39. Blue Cross surplus tax-free → $5B lost → 21% on excess → +$4B
40. Credit unions tax-free → $3B lost → over $10B assets pay tax → +$3B
41. Frat house property tax → $1B lost → no exemption → +$1B
42. Tribal casino loopholes → $4B lost → renegotiate compacts → +$3B
43. Sports team amortization → $2B lost → 15-yr only → +$2B
44. Racehorse depreciation → $1B lost → 7-yr rule → +$1B
45. Private equity fee waivers → $5B lost → ban → +$5B
46. Carried interest loans → $3B lost → include in income → +$3B
47. Blocker corps in Cayman → $8B lost → look-through → +$7B
48. Wet-ink mortgage scams → $2B lost → tighten → +$2B
49. Solar tax credit flipping → $10B lost → direct pay only → +$8B
50. Charitable LLCs → $5B lost → UBIT on trades → +$5B

Total if ALL closed: ~$650B a year. Lutnick’s realistic 2026 target: $300B + $700B tariffs = $1T external revenue.

Boom. That’s the cheat sheet.

As we move toward 2026, California employers—especially in hospitality—are navigating one of the most complex wage-and-hour landscapes in the country. The 2024 PAGA reform brought meaningful relief, but only for employers who take their compliance obligations seriously and can prove it.

At the same time, technology and AI are beginning to transform what compliance looks like. Our firm has been developing an AI-powered compliance platform designed specifically for California wage-and-hour rules, and early feedback from the first companies using it has been extremely positive. More on that below.

For now, here are the five compliance priorities every employer should be focused on as we head into the new year:

1. PAGA Reform Only Helps Employers Who Can Prove Compliance

The 2024 PAGA reform allows employers to dramatically reduce potential penalties—down to 15% of what plaintiffs could otherwise seek. But this benefit is not automatic.

To qualify, employers must show they took meaningful “reasonable steps,” including:

• Regular payroll and timekeeping audits
• Updated policies and employee handbooks
• Supervisor training
• Prompt corrective action

Documentation is now everything.
If it’s not documented, it didn’t happen.

2. PAGA Filings Are Still at Record Levels

Many assumed PAGA lawsuits would drop after the reform. They didn’t.

In fact:

• 2024 saw the highest number of PAGA filings in history
• 2025 is tracking at nearly identical levels
• A handful of plaintiff firms now file over 25% of all PAGA cases statewide

High-volume plaintiff firms are moving quickly, and state enforcement remains aggressive.
Reform changed the rules—but it did not reduce the risk.

3. Routine Payroll & Timekeeping Audits Are Your Strongest Protection

Meal and rest periods, accurate timekeeping, paystub formatting, overtime calculations, split-shift rules, and off-the-clock issues continue to drive the majority of wage-and-hour claims.

The best defense entering 2026 is a recurring audit process, ideally quarterly. These audits should review:

• Meal and rest break compliance
• Paystub formatting (Labor Code § 226)
• Overtime and double-time calculations
• Local and state minimum wage updates
• Timecard edits, patterns, and approvals

When a PAGA notice arrives proving compliance will be critical.

If you don’t have that documentation, you lose access to the 15% penalty cap.

We’ve created a simple model employers can use to set up their own audit process—a 5-step, 30-minute payroll audit. Download it here.

4. Supervisor Training Is Now Essential—Not Optional

To qualify for reduced PAGA penalties, employers must show that supervisors were trained on wage-and-hour compliance.

Effective training must cover:

• Scheduling legally compliant meal and rest periods
• How to handle late, short, or missed breaks
• Preventing off-the-clock work
• Overtime rules
• Documentation and communication requirements

Employers should maintain records of:

• Attendance
• Training length
• Topics covered
• Learning management system completions or signed acknowledgments

A well-trained supervisor can prevent more violations than any policy manual.

5. AI Will Transform Compliance in 2026—and We’re Building the Tools

One of the most important developments heading into 2026 is the arrival of AI-driven wage-and-hour compliance software.

Our firm has partnered with a developer to build a platform specifically for California employers that can:

• Analyze thousands of time records in minutes
• Detect missed, short, or late breaks
• Identify missing premiums
• Flag potential violations or patterns
• Run automated payroll audits
• Produce summaries employers can use as evidence of “reasonable steps”

Several employers are already using early versions of the software, and the feedback has been extremely encouraging. Many report that it provides compliance visibility they could never realistically achieve on their own.

If you’d like to join the waitlist for early access, sign up here.

Final Thoughts for 2026

California’s regulatory environment isn’t getting simpler—but employers have more tools than ever to protect themselves. Heading into 2026, success depends on:

• Staying current on wage-and-hour requirements
• Building consistent systems—not one-off fixes
• Documenting every compliance effort
• Training supervisors thoroughly
• Leveraging technology and AI to stay ahead of violations

If you’d like help conducting a privileged wage-and-hour audit, strengthening your compliance systems, or training your managers before the new year, my team and I are here to support you.

The post Preparing for 2026: The Top Compliance Steps Employers Need and How AI Will Transform Wage-and-Hour Management appeared first on California Employment Law Report.

The appliance division that GE sold to China almost a decade ago is shifting production back to the US. The New York Times reports: “GE Appliances on Thursday announced $150 million in new contracts to 19 suppliers in 10 states. The contracts, which will supply components for the washers and dryers, are part of a…

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As the holiday season approaches, it’s a perfect time for California employers to revisit their policies on holiday leave, scheduling, and pay practices. Last week, we covered key vacation considerations for the busy season. This week, we’re focusing on five important reminders to help ensure compliance and smooth operations as the year winds down.

1. Holiday Time Off Is Not Required Under California Law

California employers are not legally required to give employees time off for holidays, unless the request relates to a sincerely held religious belief (covered below). As the DLSE explains:

“Hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week. California law does not require employers to provide paid holidays, close their business on holidays, or give employees time off for specific holidays.”

That said, consistent application of company policies is essential, especially in 24/7 operations like restaurants, hospitality, and healthcare.

2. No Requirement for Paid Holidays or Premium Pay for Holiday Work

Employers do not need to pay employees for holidays they do not work, nor is extra pay required for hours worked on a holiday. While employers may voluntarily offer “holiday pay” or premium pay, these benefits must be clearly defined in handbooks or written policies.

Legislative attempts such as the “Double Pay on the Holiday Act of 2016” have occasionally surfaced, but none have passed. Still, given California’s active legislative climate, employers should monitor for future proposals impacting holiday pay.

3. Religious Holiday Observances Require Reasonable Accommodation

Employers must provide reasonable accommodations to employees who cannot work on certain holidays due to religious observances. This may include schedule adjustments, shift swaps, or allowing use of accrued time off. As with all accommodation issues, the analysis is fact-specific and requires an individualized assessment.

For industries that regularly operate on holidays—restaurants, retail, hospitality—employers should clearly communicate scheduling expectations in advance and ensure managers understand the accommodation process.

4. Paid Holiday Benefits Do Not Accrue Like Vacation

If an employer offers paid holidays, employees do not accrue this benefit like vacation, and unused holiday pay does not need to be paid out at separation. Employers should be explicit that holiday pay is contingent on being employed on the holiday itself.

Many employers also implement eligibility rules—such as requiring employees to work their scheduled shift immediately before and after the holiday. These rules must be applied consistently and should be clearly stated to avoid claims of unfair treatment.

5. Payroll Timing May Shift When Holidays Fall on Payday

If a holiday falls on a regular payday and the business is closed, the employer may process wages on the next business day. Employers should confirm that payroll schedules comply with the DLSE’s requirements and review the list of holidays recognized under California Government Code Section 6700, including:

• New Year’s Day
• Martin Luther King Jr. Day
• Memorial Day
• Independence Day
• Veterans Day
• Christmas Day

Additional holidays—such as Admission Day (September 9) and Native American Day (fourth Friday in September)—are also included in the Code.

Employers should review their payroll vendor’s holiday schedule now to avoid surprises and ensure timely, compliant wage payments.

Wishing you a productive and successful holiday season! With clear policies and proactive communication, employers can reduce risk, maintain compliance, and support employees during one of the busiest times of the year.

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