Delaware Hiring Guide: $15.00 Minimum Wage, UI Wage Base $14,500, Paid Family Leave 0.8% and Workers' Comp for New Employers

Starting a business in Delaware means navigating a specific set of labor and employment requirements. Whether you're a first-time employer or adding staff to a growing operation, you'll need to understand Delaware's minimum wage rules, unemployment insurance obligations, paid family leave contributions, workers' compensation requirements, and employer registration. This guide covers the key 2026 requirements and what you need to do before your first employee starts work.

Delaware Minimum Wage: $15.00 Per Hour (Effective Since January 1, 2025)

Delaware's state minimum wage is $15.00 per hour, in effect since January 1, 2025 (19 Del. C. 902(a)(5)). This supersedes the federal minimum wage of $7.25 per hour, so all employees in Delaware must be paid at least the state rate unless a higher wage applies under federal law or your industry agreement.

The tipped minimum wage floor in Delaware is $2.23 per hour for employees who receive tips (19 Del. C. 902(b)). If tips do not bring the employee to the full minimum wage of $15.00 per hour, you must make up the difference. Track the tip credit carefully.

All covered employees must receive at least $15.00 per hour. When you're budgeting payroll and calculating job costs, use the $15.00 figure as your baseline. Check the Delaware Department of Labor's wage and hour page for any updates, as minimum wage rules can change.

Unemployment Insurance: 2026 Wage Base $14,500 and New Employer Rate 1.0%

If you have employees, you must register for Delaware unemployment insurance (UI) with the Department of Labor, Division of Unemployment Insurance. The state requires you to pay a percentage of each employee's wages into the system, up to a taxable wage base limit.

For 2026, the Delaware UI wage base is $14,500 per employee per year. You pay UI tax on each employee's wages up to that threshold; wages above $14,500 in a calendar year are not subject to UI tax. The 2027 wage base may differ, so check with the Division of Unemployment Insurance closer to the end of 2026.

As a new employer in Delaware, your UI tax rate is 1.0%. This is a flat rate given to new businesses while the state builds an experience record, after which your rate is based on your claims history. Experienced employer rates range from 0.3% to 5.4%, and businesses with tax delinquencies face a penalty rate of 6.3%.

To register, contact the Department of Labor or visit labor.delaware.gov for employer services. You will need your federal Employer Identification Number (EIN) from the IRS. Register before your first payroll.

Paid Family and Medical Leave (PFML): 0.8% Employee and Employer Contributions

Delaware's Paid Family and Medical Leave program (19 Del. C. ch. 37) went into effect on January 1, 2025, with employee and employer contributions beginning immediately. Benefits are available to eligible employees starting January 1, 2026.

Contribution Rates and Structure (2025 and 2026)

The total contribution rate is 0.8% of wages, split as follows:

• 0.4% for medical leave
• 0.08% for family caregiving leave
• 0.32% for parental leave

Both employee and employer contributions apply. As the employer, you remit the contributions and may deduct no more than 50% of the required contribution from the employee's wages.

Employer Exemptions and Thresholds

Employer size determines your PFML obligations:

• Fewer than 10 employees: Exempt from PFML contributions.
• 10 to 24 employees: Must offer parental leave only.
• 25 or more employees: Must offer all three benefits (medical, family caregiving, and parental).

Small businesses with fewer than 10 employees may opt in voluntarily to the program (19 Del. C. 3717).

Benefit Amount and Maximum

Eligible employees receive 80% of their average weekly wage as a benefit, with a minimum of $100 per week and a maximum of $900 per week in 2026 and 2027. The actual benefit depends on the employee's recent earnings history. Consult the Delaware Department of Labor's paid leave page for the most current rates and benefit calculations, as these maximums may change in future years.

Workers' Compensation Insurance: Required for All Employers with Employees

Delaware requires workers' compensation insurance of employers with employees. This is not optional, even for a single employee. Workers' compensation covers medical expenses, lost wages, and rehabilitation costs if an employee is injured or becomes ill as a result of work.

Contractors working in Delaware must file proof of workers' compensation coverage with the Division of Revenue before they can obtain a contractor license (30 Del. C. 2502(b)(3)).

Check with the Office of Workers' Compensation within the Delaware Department of Labor for policy requirements, rates, and any penalties related to coverage lapses or non-compliance.

Employer Registration and New Hire Reporting

Before your first employee starts, check with the Delaware Division of Revenue (employer withholding) and the Department of Labor (unemployment insurance) to complete your employer registrations.

Delaware's new hire reporting requirement ensures that the state can track child support obligations and verify income for benefits programs. When you hire an employee, you typically must report that hire to the state. The specific timeline and reporting method depend on your payroll process and state directives. Check with the Division of Revenue and Department of Labor for the current new hire reporting procedures, including whether your payroll service handles this automatically or whether you must file a report yourself.

You will also need to verify employment eligibility under federal law (Form I-9) and obtain a valid federal EIN from the IRS. Many of these registrations can be completed online through Delaware One Stop (onestop.delaware.gov), which serves as a centralized portal for business licensing and compliance.

Business License and Gross Receipts Tax

Every person or entity conducting a trade or business in Delaware must hold a business license from the Division of Revenue (30 Del. C. chapters 21 to 29). Unlike most states, Delaware does not have a sales tax; instead, licensees pay a gross receipts tax based on their license category.

The annual business license fee is $75 for most categories (general services, professional and occupational, contractors, manufacturers, wholesalers) and $90 for general retailers, which includes a $15 retail crime fee. Additional business locations cost $25 each. Licenses expire December 31; you may renew for three years at three times the annual fee.

The gross receipts tax rate varies by license category: 0.3983% for services and wholesale, 0.7468% for retailers, 0.6472% for restaurants and contractors, 0.1991% for food processors, and 0.126% for manufacturers. This is filed monthly or quarterly (new businesses file quarterly) with a monthly exclusion of $100,000 or a quarterly exclusion of $300,000. Check the Division of Revenue's rate schedule for your specific category to confirm the tax rate that applies.

Special Licensing for Contractors and Trades

If you operate a contracting business, you will need a contractor license from the Division of Revenue, along with proof of workers' compensation coverage and a Department of Labor notice. Licensed trades such as electricians, plumbers, and HVAC technicians are regulated by specialized licensing boards within the Delaware Division of Professional Regulation. If your business falls into a regulated trade, you must hold a license issued by the appropriate board before hiring employees or conducting work in Delaware.

Independent Contractors vs. Employees: The 2301 License Fee

If you hire independent contractors rather than employees, note that only independent contractors must hold a business license (the $75 or $90 annual fee, depending on category). Employees are not required to hold a separate 2301 license. This distinction matters for both tax withholding and compliance; if you misclassify an employee as a contractor, you may face back taxes, penalties, and interest.

Wilmington Wage Tax

If you operate in Wilmington, you may be subject to an additional local wage tax on employee earnings. Check the City of Wilmington's tax code and labor pages for the current rate and filing requirements, as this varies from the state's statewide requirements.

Getting Started: Key Steps Before Your First Hire

• Obtain a federal Employer Identification Number (EIN) from the IRS (irs.gov).
• Register for a Delaware business license through Delaware One Stop (onestop.delaware.gov). This covers gross receipts tax registration.
• Register for unemployment insurance with the Department of Labor, Division of Unemployment Insurance (labor.delaware.gov).
• Verify that you have the correct employer payroll withholding information and set up payroll processing or hire a payroll service.
• Obtain workers' compensation insurance and file proof with the Division of Revenue if required by your license category.
• If you have 10 or more employees, set up PFML contributions (0.8% of wages).
• If you are in Wilmington or another municipality with a local tax, register with the local tax authority.
• If your business is a licensed trade (electrician, plumber, etc.) or contractor, ensure that you or your managers hold the required professional license before work begins.

Key Resources

• Delaware Division of Revenue: revenue.delaware.gov (business license, gross receipts tax, new hire reporting)
• Delaware Department of Labor: labor.delaware.gov (unemployment insurance, paid family leave, workers' compensation, wage and hour)
• Delaware One Stop: onestop.delaware.gov (centralized portal for business licensing and registrations)
• IRS Employer Identification Number (EIN): irs.gov (federal tax ID)
• Paid Family and Medical Leave (PFML) Program: Check the Delaware Department of Labor's paid leave page for current benefit rates and contribution information.
• City of Wilmington (if applicable): City wage tax and local business licensing.
• Division of Professional Regulation: For licensing of electricians, plumbers, and other regulated trades.

Disclaimer

This guide is for informational purposes only and is not a substitute for legal or tax advice. Delaware labor and tax laws are subject to change, and specific situations may have different requirements. Before you hire your first employee, consult with a qualified employment attorney and a certified public accountant (CPA) or tax professional familiar with Delaware employment law to ensure that your business is fully compliant. When in doubt about specific deadlines, rates, or procedures, contact the relevant Delaware agency directly.