What are the New Increased Thresholds for Overtime Eligibility?

What are the New Increased Thresholds for Overtime Eligibility?

On April 23, 2024, the Biden-Harris administration announced a new final rule from the Department of Labor that will likely have a major impact on many companies. The rule revises the Fair Labor Standards Act (FLSA) regarding overtime eligibility thresholds for executive, administrative, or professional (EAP) employees.

Many EAP employees will become eligible for overtime pay once the rule goes into effect on July 1, 2024. Although the rule is expected to face significant legal challenges, businesses must now prepare to ensure compliance if it goes into effect as scheduled.

Overview of the New Overtime Eligibility Thresholds

The FLSA requires that employees working over 40 hours per week be entitled to overtime pay. However, employees who fall within the EAP categories are exempt and are not owed overtime. These employees must receive a fixed and predetermined salary, currently $35,568 per year ($684 per week), and perform executive, administrative, or professional duties.

New Thresholds:

  • July 1, 2024: Increase to $43,888 per year ($844 per week).
  • January 1, 2025: Increase to $58,656 per year ($1,128 per week).

This represents a 40% increase in the salary thresholds for overtime in less than a year. Additionally, starting on July 1, 2027, the salary thresholds will automatically increase every three years.

Impact on Businesses

HR and payroll staff at many companies will need to reassess how employees are classified. Employees paid below the new thresholds must be reclassified as non-exempt and will be eligible for overtime pay. Businesses currently relying on lower-paid salaried workers may face significant overtime costs.

Steps for Ensuring Compliance

To ensure compliance with the new federal overtime regulations, businesses should:

  1. Review and Adjust Employee Classifications: Ensure employees earning below $43,888 on July 1, 2024, or $58,656 on January 1, 2025, are reclassified as non-exempt.
  2. Update Payroll Systems: Reflect new thresholds in payroll systems and ensure third-party or automated systems are updated accordingly.
  3. Train HR and Payroll Staff: Provide training on the new regulations to ensure staff are well-informed.
  4. Conduct Regular Payroll Audits: Ensure ongoing compliance with the new regulations, considering the two changes happening within six months.

Benefits of the New Rule

The new overtime pay rules for 2024 could result in some benefits for salaried EAP employees. If they work overtime, the extra pay for those hours will increase employee satisfaction and retention. It will also offer enhanced pay equity for lower-paid salaried workers and predictable guidelines for employers. Starting in 2027, employers will know that the thresholds will automatically increase every three years.

Challenges and Considerations

One of the challenges of the new rule is something that often occurs when a new major federal regulation is imposed on the marketplace. Some employees’ positions will simply be eliminated because it will cut into the “bottom line” for many companies. An alternative to this could be that companies will adjust work hours or redistribute workloads to stay profitable.

One of the initial challenges for employers will be the administrative and financial burden of adjusting to the new rule. Employees who don’t meet the new salary thresholds will need to be reclassified. They’ll also be entitled to more compensation if they work more than 40 hours a week, which will be a new expense for companies. Navigating complex cases might also require businesses to retain legal counsel to ensure compliance.

New Overtime Rules for 2024

Businesses must start preparing by updating their payroll systems, anticipating increased labor costs, properly reclassifying formerly exempt employees as non-exempt, and training their HR and payroll staffers on the new final rule.

Schedule a consultation with our Affiliated HR and Payroll Services compliance experts to review your payroll practices and avoid costly penalties.

 

Minimum Wage Requirements in Texas: A Business Guide

Minimum Wage Requirements in Texas: A Business Guide

The minimum wage in Texas is tied directly to the federal minimum wage. To comply with Texas labor laws, all businesses must pay employees at least the minimum hourly wage, with limited exceptions. Adequate compensation for your workers leads directly to the success of your business and increased employee satisfaction.

This guide covers the Texas minimum wage requirements, some special considerations, and some best practices your business can follow.

Texas Minimum Wage Laws

The Texas minimum wage is currently $7.25 an hour, which applies to every county and almost every municipality in Texas.

  • Austin: The City of Austin raised its minimum wage to $20.80 per hour in October 2023.
  • Houston: Houston plans to raise its minimum to $15 an hour by 2025 but is currently still in line with the state’s $7.25 an hour.

Other than these exceptions, the $7.25 an hour minimum wage is universal across the rest of Texas. The last time the minimum wage changed in Texas was in 2009, when it increased from $6.55 to $7.25 an hour.

Federal vs. State Minimum Wage

The Texas minimum wage is tied directly to the federal minimum wage, which is currently $7.25 an hour. The federal minimum wage is not tethered to inflation, so both have remained static for quite a few years. This consistency simplifies things for employers, who don’t have to navigate differences between state and federal minimum wages.

Employees who work longer than 40 hours per week are entitled to time and a half wages, or 1.5 times their usual hourly rate. For minimum wage employees, this translates to $10.88 per hour.

Compliance Requirements for Businesses

Certain exceptions to the Texas minimum wage requirements exist, which we list below in ‘Special Considerations.’ Other than in those situations, however, all employers must comply with Texas labor laws by paying minimum wage (or higher) to their non-exempt employees.

The Texas Workforce Commission enforces minimum wage laws in the Lone Star State. If a worker believes they are being paid less than minimum wage, they can file a complaint with the commission. A thorough investigation of the business is then conducted. Therefore, record-keeping for employees is crucial. Non-compliance can result in back wages and legal action.

Special Considerations

Certain categories of workers, such as certain types of volunteers, learners, and individuals with disabilities, are not subject to the minimum wage requirements in Texas:

  • Youth Workers: Under 20 can be paid a training wage of $4.25 an hour for the first 90 days of employment. 
  • Student Workers: High school and college students working part-time (20 hours or less per week) can be paid $6.16 per hour. 
  • Tipped Employees: The base wage is $2.13 an hour, with the requirement that the combined hourly wage plus tips must total at least $7.25 an hour. Tips must be reported monthly and are taxable. Employers can claim a tip credit.

Best Practices for Employers

Implementing best practices can help you meet employer responsibilities for Texas minimum wage. No bills are currently pending in the Texas legislature to raise the state’s minimum wage, but changes could happen in the future. Employers should stay informed about wage and labor laws.

  • Effective Payroll Systems: Ensure accurate and timely wage payments, employee classification, and compliance with state regulations.
  • HR and Payroll Training: Keep staff updated on compliance requirements with training materials and detailed guides.

Wage Compliance in Texas with Affiliated HR & Payroll

With the right software and training, your HR and payroll staff can keep your business compliant with Texas labor laws. Contact Affiliated HR & Payroll Services for expert guidance on managing minimum wage compliance and other payroll requirements in Texas!

 

Texas Payroll Tax Overview: What Businesses Need to Know

Texas Payroll Tax Overview: What Businesses Need to Know

As one of the world’s largest economies and the second-largest in the United States, Texas is an appealing location for starting or expanding a business. However, it’s crucial to meet Texas payroll tax obligations by understanding both federal laws and how Texas Workforce Commission (TWC) unemployment taxes work. Efficiently managing these state-specific payroll tax issues ensures smooth operations. Here’s what you need to know about Texas payroll tax obligations.

Understanding Texas Payroll Taxes

Texas residents need federal income taxes withheld from their paychecks, as required of most American employees. The withholding rate is determined by the IRS Form W-4, based on the employee’s filing status, dependents, and other income sources.

However, Texas does not have a state income tax. There are also no municipal income taxes since the Texas state constitution explicitly prohibits taxes on personal income. This equates to higher take-home pay for most Texas employees and one less withholding item for Texas employers to be concerned with.

The primary employer payroll responsibilities are the Federal Insurance Contributions Act (FICA), which encompasses Social Security and Medicare, the Federal Unemployment Tax Act (FUTA), and the Texas Workforce Commission (TWC) Unemployment Tax, or SUTA.

FICA (Federal Insurance Contributions Act)

  • Employer Contribution: 7.65% of each employee’s wages, with 6.2% for Social Security and 1.45% for Medicare.
  • Earnings Cap: Social Security contributions cap at $168,600 for 2024. There is no cap on Medicare contributions.

FUTA (Federal Unemployment Tax Act)

  • Employer Contribution: 6% on the first $7,000 of each employee’s wages annually.
  • Potential Reduction: Texas employers may qualify for a reduced FUTA rate if they pay Texas unemployment taxes (TWC/SUTA) on time, lowering the net FUTA rate to 0.06%.

TWC/SUTA (Texas Workforce Commission/State Unemployment Tax Act)

  • Employer Contribution: Based on the first $9,000 of an employee’s wages annually.
  • Tax Rates: Vary depending on the employer’s status (new or existing), timeliness of payments, and chargebacks. The general tax rate for 2024 is 1.22%.

Texas Unemployment Tax

The Texas Unemployment Tax is comprised of several components:

  1. General Tax Rate (GTR): 1.22% for 2024.
  2. Replenishment Tax Rate (RTR): 0.15% for 2024.
  3. Obligation Assessment Rate (OA): 0% for 2024.
  4. Deficit Tax Rate (DTR): 0% for 2024.
  5. Employment and Training Investment Assessment (ETIA): 0.1%.

Combining all five components, the total unemployment tax rate for Texas employers in 2024 ranges from a minimum of 0.25% to a maximum of 6.25%.

State-Specific Deductions

Texas does not impose state-specific payroll taxes, such as mandatory contributions for disability insurance, which are required in some other states. However, employers must still manage federal deductions, including student loan garnishments, child support, tax levies, and other court-ordered payments. It is crucial for employers to ensure that these wage garnishments are correctly paid to the appropriate authorities to avoid penalties.

Employer Responsibilities and Best Practices

Employers must accurately report employee compensation and payroll taxes, including both mandatory and voluntary deductions. Key practices to ensure compliance include maintaining accurate reporting, which involves ensuring that all compensation and tax information is correctly reported to tax authorities.

Efficient record-keeping is also essential, and using cloud-based systems can provide secure, real-time updates, making it easier to manage changing tax rates and employee data. Additionally, staying compliant by filing early and paying on time helps avoid costly penalties and disruptions. 

Outsourcing Payroll

Outsourcing payroll to professionals can provide additional support, allowing you to focus on growing your business. Payroll experts stay updated on tax changes, including state-specific issues, and offer tailored solutions for your business needs.

While Texas may have fewer payroll taxes and regulations than other states, staying on top of TWC rates and policy changes is crucial. By complying and paying early, you can save money and avoid disruptions. Contact Affiliated HR & Payroll Services for expert assistance with managing your payroll taxes and ensuring compliance with Texas regulations.

 

Revolutionizing Recruitment: Innovative Strategies for Modern Talent Acquisition

Revolutionizing Recruitment: Innovative Strategies for Modern Talent Acquisition

Gone are the days of running a “Help Wanted” ad in the local newspaper and waiting for resumes to come in. In today’s competitive hiring market, modern recruitment strategies are essential to attract and hire the best talent. Social recruiting, data-driven hiring practices, and advanced applicant tracking systems all play a crucial role. Let’s explore how you can use these innovative strategies to revolutionize your recruitment process.

The Rise of Social Recruiting

Social recruiting involves using social media apps like Twitter, Facebook, and LinkedIn to find new hires. According to data from Insight Global, 56 percent of recruiters say they find their best hires through social recruiting. More than 70 percent of job hunters between 18 and 34 found their most recent job through one of these social sites. It’s clear that social recruiting is beneficial for both recruiters and job seekers.

Engaging consistently with potential candidates is important for success in social recruiting. Some companies even involve their own employees in these efforts. This approach casts a wider net and allows potential applicants to network with peers who already work for you. Social media posts should either openly or implicitly convey your company’s culture and core values.

Leveraging Data-Driven Hiring Practices

Recruiters today have access to a global talent pool, which means they often receive more applications than they can reasonably screen. Data analytics software offers a solution.

These tools help your HR team streamline hiring and make more informed decisions. Sophisticated tools can analyze candidate behavior, compare it to market trends, and predict better hiring outcomes. For instance, you can identify which qualifications or experiences are most correlated with success in your roles, allowing you to prioritize candidates with these attributes. Data analytics software simplifies the entire hiring cycle for your team.

Innovative Recruitment Technologies

When faced with hundreds or even thousands of applicants, automated screening tools and AI-driven applicant tracking systems (ATS) can help. These tools can screen applicants for specific skills and competencies while filtering out unqualified candidates. They allow you to search through large volumes of applications quickly and automate repetitive tasks, saving your organization time and money.

Digital hiring platforms are another recent innovation. These platforms enable you to request and review video-recorded answers to questions from applicants at your convenience, simplifying the traditional hiring process. This can be particularly useful for initial screening interviews, allowing you to assess candidates’ communication skills and enthusiasm before scheduling in-person or live video interviews.

Integrating Applicant Tracking Systems

A sophisticated applicant tracking system (ATS) can help manage candidate flow through the hiring process. These systems keep everything organized, so you always know exactly where candidates are in the process and who you will be interviewing next. They also allow total customization of the questions you want to ask job applicants.

Utilizing an ATS also improves the candidate experience. An ATS keeps candidates in the loop and informs them of the next steps in the process so they always know whether they are still under consideration. This system makes your entire hiring process more seamless and transparent, which can enhance your employer brand.

Transforming the Recruitment Process

Due to the global talent pool available today, companies need to take advantage of cutting-edge recruitment technologies. These technologies can streamline your hiring process, improve the quality of new hires, and increase the efficiency of your HR team.

If you’re ready to transform your recruitment process, Affiliated HR & Payroll has the advanced talent solutions you’re looking for. Visit our recruitment solutions page to learn more and get started today!

Tailoring HR Solutions for Diverse Texas Industries

Tailoring HR Solutions for Diverse Texas Industries

Texas, with its massive and diverse economy, offers a wealth of opportunities for employers. The state is continually growing, attracting talent from all over. However, each industry in Texas has its own set of challenges. Whether you’re in oil and gas, technology, or healthcare, understanding these unique needs is key to effective HR management. Let’s dive into how tailored HR solutions can make a difference.

Challenges in Each Industry

Oil and Gas

The oil and gas industry is a cornerstone of the Texas economy, providing more than two million jobs. This sector offers high pay and job stability but comes with its own set of challenges. The industry plays a vital role in not only providing employment but also contributing significantly to the state’s overall economic growth.

  • Safety Concerns: Safety is a major issue. Workers often operate in remote and hazardous conditions. Ensuring their safety requires strong safety programs and compliance with regulations. Noncompliance can lead to significant risks and liabilities. For example, a worker handling machinery alone in an oil field needs robust lone-worker safety solutions to ensure their well-being.

  • High Turnover: Due to the demanding nature of the work, employees often leave quickly, making it hard to predict staffing needs. This high turnover rate means that HR must constantly be looking for qualified replacements, which can drain resources.

Tech

Texas has emerged as a significant tech hub, ranking second only to California. The city of Austin, in particular, has become a thriving tech hotspot, drawing in a substantial influx of thousands of tech workers due to its vibrant tech ecosystem and numerous job opportunities.

  • Talent Acquisition: Although the talent pool is large, finding the right skills can be tough. The tech industry faces waves of layoffs and restructuring, which can lead to a mismatch between the skills employers need and what job seekers offer. This makes the recruitment process challenging as HR must sift through numerous candidates to find the right fit.

  • Retention Issues: Keeping tech workers is challenging, especially with ongoing debates about remote work. Many workers are unsure about job security and may return to other states. Additionally, the fast-paced nature of the tech industry means that employees are always looking for the next best opportunity, making retention a constant challenge. Companies need to offer competitive salaries and a work environment that aligns with the expectations and lifestyles of tech professionals.

Healthcare

The healthcare industry plays a crucial role in Texas, with a wide array of insurance companies, academic institutions, and healthcare service providers contributing to the sector’s prominence and impact on the state’s economy and well-being.

  • Staffing Shortages: There’s a significant shortage of healthcare workers, from nurses to support staff. This makes it hard to predict and meet staffing needs. Hospitals and clinics often struggle to maintain adequate staffing levels, leading to overworked employees and potential burnout.

  • Regulatory Compliance: Healthcare workers must consistently be trained on regulations like HIPAA. Noncompliance can lead to serious liabilities. For instance, a single HIPAA violation can result in hefty fines and damage to the healthcare provider’s reputation. Ensuring all employees are up-to-date with compliance training is an ongoing challenge for HR departments.

Customized HR Solutions

Oil and Gas

For the oil and gas sector, HR solutions need to focus on safety and remote workforce management.

  • Safety Programs: It is crucial to implement robust safety programs that track compliance for each employee. These programs should include regular safety drills, proper equipment maintenance, and clear communication channels for reporting hazards.

  • Remote Management Tools: These tools help communicate and monitor activities across various job sites, ensuring worker safety and efficiency. For instance, GPS tracking and digital check-ins can ensure that lone workers are safe and accounted for throughout their shifts.

Tech

In the tech industry, attracting and retaining talent is key.

  • Workplace Culture: Developing a workplace culture that aligns with tech workers’ expectations can help retain them longer. This includes promoting a flexible work environment, fostering innovation, and encouraging a healthy work-life balance.

  • Innovative Recruitment: Using advanced recruitment processes ensures that the right skills are identified and hired and that their talents are further developed. Leveraging data analytics can help identify candidates who fit not only the technical requirements but also the company’s cultural fit.

Healthcare

For healthcare, the focus is on filling positions quickly and maintaining compliance.

  • Staffing Solutions: Tailored HR solutions can help find workers for unfilled roles swiftly. This might include partnerships with nursing schools, offering signing bonuses, or utilizing temporary staffing agencies to fill immediate needs.

  • Training and Compliance: Implementing effective training programs for compliance ensures that all workers are up-to-date with necessary regulations. Regular workshops and online training modules can keep staff informed about the latest healthcare laws and best practices.

  • Efficient Scheduling: Improved scheduling systems can reduce worker burnout and miscommunications. Utilizing advanced scheduling software can help ensure that shifts are covered adequately without overburdening individual employees.

Benefits of Tailored HR Services

Implementing HR solutions tailored to specific industries can lead to increased efficiency, stronger compliance, and happier employees. Texas employers can overcome industry challenges by partnering with experts like Affiliated HR and Payroll. We help create a roadmap for a stronger workplace culture and retention strategy.

Discover how our tailored HR solutions can meet the unique needs of your industry. Contact us today to learn more and get started!