E-Commerce & DTC Brands: State Payroll Compliance Issues (2026)

Where state law touches e-commerce companies specifically

A business is covered by the FLSA as an enterprise when it has at least two employees and an annual dollar volume of sales or business done of at least $500,000. Even without enterprise coverage, individual employees are covered when their work regularly involves interstate commerce, such as handling goods that will be shipped out of state.

The executive, administrative and professional exemptions do not apply to manual laborers or other blue collar workers who perform repetitive operations with their hands, physical skill and energy. Such workers are entitled to minimum wage and overtime no matter how highly they are paid.

For tax years beginning after 2025, Form 1099-NEC must be filed for each non-employee paid at least $2,000 for services during the year, up from the prior $600 threshold. The IRS instructions state the threshold may be adjusted for inflation beginning in calendar year 2027.

The state layer every employer carries

Each state where an employee of an e-commerce company works can set its own minimum wage, its own overtime trigger, a pay-frequency law, a new hire reporting deadline shorter than the federal 20 days, a final paycheck deadline, and a continuation coverage rule below the federal COBRA threshold. The state pages on this site carry those facts state by state from one data file, so the numbers here and on the multi-state checker never disagree.