The regulatory environment is ever-changing for employers. We wanted to highlight some recent changes:
Employee Overtime Protections
The United States Department of Labor’s (“DOL”) regulations for determining whether salaried employees are exempt from minimum wage and overtime requirements will be changing effective July 1, 2024. All employers should be aware of these changes.
Currently, an employee may be considered exempt (not subject to minimum wage or overtime pay requirements) if:
1.) they are paid a salary, which is a specified weekly amount regardless of hours worked, and
2.) they perform executive, administrative or professional duties (as specified by the DOL).
Before July 1, 2024, the DOL had set the weekly “compensation” at $684 per week (or $35,568 annually). Effective July 1, 2024, this amount increases to $884 per week (or $43,888 annually). What does this mean? If you have an employee to whom you are currently paying a salary of $650 per week and you do not increase their compensation, effective July 1, 2024, they will be entitled to minimum wage and/or overtime pay.
The compensation level will be updated regularly going forward. It will move to $1,128 per week (or $58,656 annually) on January 1, 2025. The next increase is set for July 1, 2027, and then every three years thereafter.
Please note that your payroll provider will not “automatically” update your employees’ salary level to ensure those employees remain exempt. Please look at your employees’ pay rates to ensure you are within the proper levels.
Looking for additional information? We are more than happy to answer any questions you may have. Also, the DOL’s website has a comprehensive page discussing these changes including a Frequently Asked Questions page, a YouTube video, and a webinar:
(https://www.dol.gov/agencies/whd/overtime/rulemaking)
The DOL has provided numerous resources for employers to understand this change and to ensure compliance.
Employee Retention Tax Credits – An Update
The employee retention tax credit (ERTC or ERC) has been a hot topic with employers over the past few years. This program provided credits ranging from $5,000 to $7,000 per employee either annually or quarterly depending upon the year and employee earnings. Many employers have been waiting for some time to hear back from the Internal Revenue Service (IRS) about their claims. In September 2023, the IRS paused the processing of claims due to their concern about a high level of fraud. The IRS has approximately one million submissions representing more than $86 billion that they are reviewing for fraud. In conjunction with the pause, the IRS launched a forgiveness program whereby employers who received ERTC payments and are concerned that they may not have entitled to those payments, can voluntarily return 80% of the amount received. They can keep the 20% and do not have to worry about prosecution at some later date.
The IRS recently announced that they hope to lift the pause and once again begin paying legitimate claims later this summer. The payments will be at a slower pace than earlier in the program.
It’s important for businesses to say informed of the constantly changing regulations. Let us know how we can help.
