Horizon Point Consulting

Tag: legal update

  • What Employers Need to Know About the Big Beautiful Bill

    What Employers Need to Know About the Big Beautiful Bill

    On July 4th, the President signed into law the “One Big Beautiful Bill Act” (BBB), a massive budget reconciliation measure aimed at providing major tax cuts, stimulating the economy, expanding funding for defense and border protection, cutting certain social welfare programs, and raising the national debt ceiling. At nearly 900 pages, there’s a lot to digest. What follows is our interpretation of key provisions as they relate to employers.

    Tax Cuts for Employees and Employers

    As we understand it, these deductions are temporary, starting in 2025 and expiring after the 2028 tax year.

    • Overtime Wages:
      Employees who earn “qualified overtime” can deduct up to $12,500 for single filers or $25,000 for joint filers. Qualified overtime is defined under the Fair Labor Standards Act (FLSA). These deductions phase out for employees earning over $150,000 (single) or $300,000 (joint). Our understanding is that employers will need to track qualified overtime separately and report it on W-2s, although tax withholding procedures remain unchanged.

    • Tipped Wages:
      Employees can deduct up to $25,000 in “qualified tips” received in jobs that customarily receive tips prior to December 31, 2024. This deduction also phases out based on gross income. It appears that employers must continue reporting tips separately on W-2s, consistent with current requirements.

    • 1099 Contractors:
      The reporting threshold for payments to independent contractors increases from $600 to $2,000. (Are your 1099 employees misclassified? We talk about that here.)

    Changes to Benefits Programs

    • Dependent Care FSAs:
      Maximum contributions increase from $2,500 to $3,750 for single filers and $5,000 to $7,500 for joint filers. Employers are not required to adopt the new maximum, but doing so may enhance employee benefits. From our perspective, if employers choose to increase limits, plan documents should be updated with the plan administrator.

    • Paid Family and Medical Leave (PFML):
      Tax credits for PFML are now permanent. The employment period for eligibility is reduced from 12 months to 6 months, with a minimum of 20 hours/week worked. Employers required to provide leave under state/local laws can still claim credits for leave provided beyond those requirements. In our reading, the bill offers two calculation methods for the credit:

      1. As a percentage of wages paid to qualified employees during leave.

      2. As a percentage of total premiums paid or incurred for insurance covering PFML, regardless of whether leave was used.

    • Telehealth Services:
      Employers can continue to offer telehealth under HDHPs without imposing a deductible for employees or eligible dependents.

    • Employer Student Loan Payments:
      The tax exclusion for employer contributions toward student loans up to $5,250/year is now permanent. Inflation adjustments begin after the 2026 tax year. Employers should update payroll and accounting systems accordingly.

    • Relocation Expenses:
      The temporary elimination of moving expense deductions and tax-free employer reimbursements (from the 2017 Tax Cuts and Jobs Act) is now permanent.

    Immigration Compliance

    The BBB provides significant funding for ICE, which likely means:

    • More frequent and rigorous I-9 audits.

    • Increased scrutiny of hiring and retention practices for foreign workers.

    Our recommendation, based on this understanding, is that employers should conduct thorough I-9 audits, ensure all staff completing I-9 forms are trained, and consider using the Federal E-Verify system if not already doing so.

    Final Thoughts

    The Big Beautiful Bill introduces substantial changes that directly impact employers, from tax deductions and benefits program enhancements to stricter immigration compliance requirements. From our perspective, employers who proactively update policies, train staff, and adjust payroll systems will be better positioned to leverage the benefits while maintaining compliance.

    This is a complex, evolving area. Our intent here is to share our understanding and interpretation, not legal or tax advice. We encourage employers to consult directly with legal, tax, or benefits professionals to determine how these provisions apply to their specific situation.

  • Employment Law Updates: Key Changes Impacting Your Business This Year

    Employment Law Updates: Key Changes Impacting Your Business This Year

    As we have already seen in the last two weeks, with a new administration comes big changes. Let’s take a look at what we know is ahead for us with employment law updates in 2025 and what may still be to come. 

    Alabama Employment Law 

    For employers in Alabama, there are a few laws that passed last year that may have tax implications for your organization. You can click on any of the headings to read more about each of these employment law updates in 2025. 

    Childcare Center Tax Credit: This tax credit went into effect on January 1, 2025 and will run through December, 31, 2027, unless it gets extended. In order to qualify, the organization must be a childcare provider licensed by the state and participate in the Qualified Rating and Improvement System and Child Care Subsidy Program. Qualifying organizations may receive a tax credit of up to $25,000 annually to be used to against income taxes, state portion of the financial institution excise tax, insurance premiums tax, or utility license tax. 

    Workforce Housing Tax Credit: The housing credit is intended to encourage and promote investment in affordable rental housing for low-income families near employers or new areas of economic growth. It offers a dollar-for-dollar credit for certain Alabama tax liabilities. 

    Overtime Pay Exemption: The overtime pay tax exemption continues for 2025 and is currently set to expire on June 30, 2025. Currently employees are not taxed on overtime wages and the state has enforced certain reporting requirements on employers. We will keep an eye on this to see if the exemption is extended beyond the current expiration date.  

    Alabama House Bills to watch

    There are currently three bills in the state legislature bringing possible employment law updates in 2025. These are the bills under consideration that could impact employers if passed.  

    HB20: In recent years there have been a few states and localities to look at discrimination on the basis of weight, and Alabama has joined the list. House Bill 20, if passed, would make it illegal to base hiring and employment decisions on a person’s weight or body size. It’s important to note under this bill that there is not a Bona Fide Occupational Qualifications (BFOQ) exception. 

    HB21: House Bill 21 mirrors the Federal law requiring employers to provide reasonable break time and make a reasonable effort to provide a private location, other than a bathroom, for employees who are nursing mothers to use for lactation purposes. 

    HB29: House Bill 29 relates to updates to the current state unemployment benefits requirements. The primary impact of this Bill would be to change the current requirement that a recipient of benefits apply to at least three (3) positions per week to retain their benefits up to five (5) applications per week. 

    Federal Employment Law: 

    Let’s start by looking at what bills are sitting in the House and Senate that might impact employers this year, then we’ll discuss the administrative actions that have occurred in the last two weeks, what we know and don’t know about them, and how they may impact your organization. 

    There have been recent bills introduced in the House and/or Senate relating to wages for secondary employment being exempt from income taxes, updating the Immigration and Nationality Act with regards to E-Verify usage, and multiple bills that address various aspects of immigration that could have an impact on work visas and authorizations. There isn’t much information available about each of these bills yet as they were just introduced and the text has not yet been made public on Congress.gov. 

    Executive Orders

    Now let’s talk about the recent Executive Orders that have been signed by President Trump and what they may mean for your organizations. 

    In summary, there are a few major areas that we will be watching over the next year. The Executive Orders signed by President Trump leave a lot of questions unanswered and we will just have to wait and see how they ultimately impact Federal agencies and contractors, as well as other private and public employers. The primary areas to watch are

    • immigration and the impact on work visas and authorizations
    • regulations pertaining to federal contracting including DE&I initiatives
    • Title VII protections against discrimination on the basis of sexual orientation and gender identity.

    The Trump administration is focused on ending “illegal and discriminatory programs” that were implemented as part of Biden’s DE&I initiatives. President Trump has required that all Federal employment practices, union contracts, and training programs and policies be reviewed and brought into compliance with Executive Order 14151.

    EO14151 requires that employment decisions and practices be based on individual initiative, skills, and performance, and that DE&I factors, goals, mandates, etc. are not factored into the decisions. It also dictates that Federal agencies require that their contractors and sub-contractors base their employment decisions on the same, thus eliminating affirmative action employment decisions. There are a number of review and reporting requirements that are outlined and may impact Federal agencies, contractors, and sub-contractors depending upon the findings. Unfortunately, the full impact of this Executive Order may not be known for quite some time. 

    In addition to the rollback on DE&I initiatives, the Trump administration has rolled back a number of Executive Orders implemented by previous administrations including EO13988: Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation. We will have to wait and see how this recension plays out given the fact that the Supreme Court ruled in Bostock v. Clayton County, GA (2020) that Title VII of the Civil Rights Act protects from discrimination on the basis of gender identity and sexual orientation. 

    While this is a very brief overview, more information on employment law updates in 2025 (and what may be to come) can be found at the resources below:  

    A Note From Our Team

    Horizon Point believes in diverse, equitable, and inclusive workplaces. We believe that the most successful, thriving businesses are those who value People First and create a sense of belonging for those they employ and serve.

    We will continue to support our clients in driving the workplace forward through innovative people practices: our compensation plans address pay equity, our training programs are designed for diverse learning needs, and our engagement services focus on inclusion and development of all people in the workplace. To learn more about our work in these areas, read these stories from our team:

  • Legal Update

    Legal Update

    We are only in May and already we have seen a number of employment law updates this year that have a huge impact on employers. Johnson, Paseur, & Medley, LLC shared the info in the images below with us:

     

    Fair Labor Standards Act

    The #1 change everyone is talking about and preparing for is the recent update to FLSA. Effective July 1, 2024, the salary threshold for a position to be eligible for exempt status will increase to $43,888 ($844 per week) and will increase again effective January 1, 2025 to $58,656 ($1,128 per week). This is almost a 65% increase in the threshold and will have a significant impact on many employers and employees. In addition, the highly comped threshold will increase from $132,964 to $151,164 effective January 1, 2025. 

    As the first deadline is quickly approaching, employers should be reviewing the current salaries of all exempt staff to determine how many employees this will impact and how to proceed with each position. Below are a few things to consider:

    • If an employee’s current salary is close to the new January 2025 threshold, would it be more beneficial to increase their salary to meet the new requirement. 
    • If an employee’s current salary is between the July 2024 and January 2025 thresholds, when should you move them to a non-exempt status and how far in advance should you communicate that change to the affected employees? 
    • For those employees that you will need to convert to non-exempt, is moving them to a salary non-exempt position the right option for your organization? This means that you guarantee an employee their full salary for hours worked up to 40, but would still be required to pay them overtime for hours worked in excess of 40 per work week. 
    • When do you need to have these converted employees set up in your timekeeping system so that they can begin to track their hours, and do you need to schedule training for these employees on how to use the timekeeping system? 
    • Does your organization have highly comped employees who will be impacted by the threshold increase and if so, what is the best way to navigate that impact? 
    • And the biggest question employers must ask is what financial impact will this change have on your organization and how can you mitigate that impact? 

    Also, employers need to be prepared for the long-term effects of the most recent FLSA changes, as it also includes an increase every three years, with the next increase going into effect July 1, 2027. The rate of change has not been determined and will be calculated every three years based on current calculation methods, so the full impact of future increases is still unknown. 

    To assist employers with understanding the new FLSA rules, the Department of Labor has scheduled two webinars that employers can sign up to attend for free. 

    Non-Compete Agreements

    In April, the Federal Trade Commission (FTC) issued a ruling banning most non-competes effective September 4, 2024. This ban includes non-competes for all employees, including senior executives. Current non-competes become null and void for most employees, with the exception of senior executives. If senior executives have a current non-compete, they can remain in force if those individuals earn at least $151,164 and are policy makers. However, effective September 4th, no new non-competes can be entered into with senior executives. 

    As part of this ruling, companies who have current non-competes in place will be required to notify all employees, excluding those current senior executives, that the non-competes will be null and void effective September 4, 2024. To aid in this effort, the FTC has provided sample language employers can use. 

    While employers can no longer utilize non-compete agreements, there are alternatives to help protect proprietary information, such as a non-disclosure agreement or confidentiality agreement. In addition, Federal Trade Laws provide a great deal of protection to employers. 

    EEOC Guidance on Harassment in the Workplace

    A few weeks ago, the EEOC released final guidance for employers on the legal standards and employer liability that apply to harassment claims. This new issuance was designed to update and consolidate the previous five guidance documents issued between 1987 and 1999. Since the last guidance was issued, there have been significant changes to discrimination laws, including the landmark decision in Bostock v. Clayton County (2020) in which the Supreme Court ruled that sexual orientation and gender identity were protected under Title VII. 

    The newly issued guidance includes a significant number of examples to illustrate various forms of harassment and discrimination, not only from coworkers, but also from vendors, customers, and other third parties. It also addresses the changes in the workforce, such as remote work, increased use and modernization of technology, and social media harassment. 

    In addition to these changes, there have been some significant guidance documents released recently, as well as a significant decision by the Supreme Court that impacts discrimination claims. 

    What to Watch For

    In addition to the updates above, there are a number of items that HR professionals and business leaders should keep on their radar this year. 

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