1. Support Center
  2. Compliance Updates
  3. Wage & Hour

Wage & Hour

Updated

State / Jurisdiction:

 

Federal / All

Retirement Savings Updates for 2025 - Secure 2.0 

The update for 2025 under a change made in the SECURE 2.0 Act of 2022 allows employees who are between 60-63 years old to contribute a higher catch-up amount of up to $11,250 for 2025, which is increasing from the 2024 limit of $7,500.  

Note that the limit on annual contributions to an Individual Retirement Account (IRA) remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 to include an annual cost‑of‑living adjustment but remains $1,000 for 2025. 

For more information on these changes in Avionté, refer to our December 2024 release notes and Knowledge Base article on this topic.

 

Flexible Spending Accounts - 2025 Updates 

The IRS has announced increased contribution limits for Flexible Savings Account (FSA) in 2025. 

  • Health Flexible Spending Accounts (Health FSAs) - The payroll deduction contribution limit for the 2025 plan year has increased to $3,300, reflecting a $100 increase from the previous limit. 
  • Dependent Care Flexible Spending Accounts (Dependent Care FSAs) - The maximum contribution limit for the 2025 calendar year remains at $5,000 (or $2,500 if married and filing taxes separately). This contribution limit is not adjusted for inflation. 

For further details, refer to the IRS compliance guidance: IRS Revenue Procedure 24-40, in addition to Avionté's Knowledge Base article (Benefit Plan Limits for 2024 and 2025) and our December 2024 release notes.

 

Health Spending Accounts - 2025 Updates

The IRS has announced increased limits for annual Health Savings Account (HSA) contributions for the 2025 tax year. The annual contribution limit for individuals has increased to $4,300, while the family limit has increased to $8,550. (Note that these limits include both employee and employer contributions.) Catch-up contributions for individuals aged 55 and older remain unchanged at $1,000 for 2025. For further details, refer to the IRS compliance guidance: Revenue Procedure 24-25. Also refer to Avionté's KB article on this topic: Benefit Plan Limits for 2024 and 2025as well as  Avionte's December 2024 release notes.

Court Invalidates New Salary Threshold for OT Exemptions  

As previously reported, the  U.S. Department of Labor (DOL)'s overtime rule regarding minimum salaries for exempt employees had been in effect since July 1, 2024. This rule under the Fair Labor Standards Act (FLSA), referred to as "white collar" exemptions, was set aside by the U.S. District Court for the Eastern District of Texas on a nationwide basis on November 15, 2024.  

 

The court decided that all components of the rule exceeded DOL’s statutory authority under the FLSA. As a result, the increase in the overtime threshold scheduled to become effective on January 1, 2025, will not go into effect. In addition, the court struck down the previous increase that went into effect on July 1, 2024. And lastly, the court held that the automatic “escalator” provision that would have increased the threshold every three years going forward is considered unlawful. 
 
Employers should consult with legal counsel if they had previously adjusted the salaries or exemption status of employees who earned less than the salary threshold set by the now-invalidated increase. It is also noteworthy that some states have salary thresholds that exceed the FLSA standard, such as Alaska, California, Colorado, Maine, New York, and Washington. For more information, refer to this Littler article.
 

IRS Increases 2025 Flex Spending Account Limits 

The Internal Revenue Service (IRS) has increased the contribution limit for employees to their Flexible Spending Account (FSA) for 2025. Participating in an FSA allows employees to contribute a maximum of $3,300 via pre-tax payroll deductions from their earnings. This amount is exempt from federal income tax, Social Security, and Medicare taxes, which helps save overall healthcare costs. If a spouse is also covered under a separate plan with their employer, they are also allowed to contribute up to $3,300 to their FSA. 

IRS Increases 401K Contribution Limits for 2025 

The Internal Revenue Service (IRS) recently published the increased limit that individuals can contribute to their 401k plans for 2025. This amount has increased from $23,000 to $23,500 for 2025, and this limitation is also applicable to 403b, government 457 plans, and the Thrift Savings Plan. Technical guidance regarding cost‑of‑living adjustments that affect dollar limits for pension plans and other retirement-related items for tax year 2025 has also been issued by the IRS. Note that the limit on annual contributions to an IRA is unchanged at $7,000, as is the IRA catch‑up contribution limit for individuals aged 50 and over, remaining at $1,000 for 2025. 

 

DOLUpdates Minimum Wage for Federal Contractors

The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) recently published an advanced notice of an upcoming increase to the minimum wage rate for federal contractors. Effective on January 1, 2025, the new rate of $17.75 per hour will replace the current rate of $17.20 per hour. 

 

Note that Avionté continues to monitor state and local minimum wage rate increases for the upcoming new year and will make updates as needed to the Knowledge Base articles for both the United States as well as for Canada to support our clients maintain compliance. 

 

DOL's Minimum Salary Requirement Upheld 

The U.S. Court of Appeals for the Fifth Circuit has upheld the Department of Labor's salary basis in determining who qualifies for overtime exceptions in executive, administrative, or professional (EAP) positions that have traditionally been referred to as "white collar" jobs. The decision was upheld on September 11, 2024, in the Mayfield vs. U.S. DOL case. The new rule takes effect January 1, 2025, to raise the minimum salary level to nearly $59K. This will make an anticipated four million employees ineligible for the exemption, which will qualify them for overtime compensation under the Fair Labor Standards Act (FLSA) as a result.

 

U.S. Court of Appeals Strikes DOL Tip Credit Rule 

For employers who have struggled with implementing the Department of Labor's (DOL) 2021 "dual jobs" rule regarding work activities that qualify as tip-producing duties, this news comes as a relief. That relief may be temporary as the case returns to trial court yet again for further consideration. Avionté will monitor for further updates on the outcome, while employers should continue to maintain compliance with state laws where they operate, which may differ from federal regulations. 

 

Non-compete Contracts Still on the Table for Now 

On August 20, 2024, Federal District Court Judge Ada Brown of Texas blocked the enforcement of the Federal Trade Commission's (FTC) rule banning most employers from enforcing non-competition agreements.  Although the FTC may appeal the decision, it will likely be unenforceable on a broad scale. Non-competition agreements are still difficult for employers to maintain based on state law restrictions and recent developments by the National Labor Relations Board. For more details, refer to this article on the JD Supra website. 

 

Reminder: DOL Overtime Exemption Now in Effect 

The U.S. Department of Labor (DOL)'s overtime rule regarding minimum salaries for exempt employees has been in effect since July 1, 2024. The rule under the Fair Labor Standards Act (FLSA), often referred to as "white collar" exemptions, applies to executive, administrative, professional, sales positions, and employees with computer-related duties. For more information, refer to the DOL's website. Note that a lawsuit filed by the state of Texas resulted in a federal court blocking the increase of salary thresholds under the overtime rule.  

Lawsuit Filed to Block DOL Salary Thresholds for OT Exemptions

On May 22, 2024, more than a dozen business groups and a company filed a lawsuit seeking to block the U.S. Department of Labor’s (DOL) new final rule that significantly raises the minimum salary thresholds for the Fair Labor Standards Act’s (FLSA) white-collar overtime exemptions and will require employers to either provide salary increases to millions of exempt workers across the country, or reclassify them so they are eligible for overtime. See this article from Ogletree Deakins for details.

DOL Announces Increased Salary Threshold for Overtime Exemption  

The U.S. Department of Labor released its final rule on April 23, 2024, which raises the salary threshold for overtime exemptions under federal law. The minimum salary will increase by 23% to $43,888 as of July 1, 2024. An additional increase in January 2025 will raise the salary threshold to $58,656. This rule under the Fair Labor Standards Act (FLSA) also raises the minimum salary threshold for "white collar workers" (executives, professionals, and administrators). Employers should review their salaries and classification policies to make changes as necessary to be compliant with the new overtime rule.  

 

New Classification of Independent Contractors Under the Department of Labor (DOL) Rule 

The new definition of independent contractor status according to the DOL's final rule will be used to help employers and workers better determine who is considered an independent contractor as of March 11, 2024. The new rule restores the six-factor analysis to help prevent the misclassification of employees as independent contractors.

 

Canada

Canada's Minimum Wage Rates 

While there was no update to Canada's Federal minimum wage rate for January 1, 2025, nor to any provincial or territorial rates, there are many changes anticipated for April 1, 2025. Avionté will continue to monitor these rates for Canada, and we will update them in our KB article for your reference and publish a notification in this Bulletin. 

Canada Minimum Wage Updates – Q4 2024

The following provinces in Canada have recently updated or are updating their minimum wage rates as of October 1, 2024. As a reminder, the current Canadian Federal hourly wage rate is $17.30. Refer to  Avionté's Knowledge Base article for more details on wage rates for Canadian provinces and territories.
 

  • Manitoba – rate increases to $15.80 eff. October 1
  • Northwest Territories– rate increased to $16.70 in Sept.
  • Ontario – rate increases to $17.20 eff. October 1
  • Prince Edward Island –rate increases to $16.00 eff. Oct.1
  • Saskatchewan – rate increases to $15.00 eff. Oct.1

Canada Exempts Select Industries from Predictable Scheduling Requirements 

Beginning on June 1, 2024, employers in the air sector will be exempt from the hours of work regulations related to schedule predictability. This industry joins the groups that were exempted as of January 1, 2024, which includes the banking, telecommunications, broadcasting, and rail sectors. 

 

Ontario Requires Licenses for Temp Agencies and Recruiters 

Effective July 1, 2024, temporary help (or staffing) agencies will have to be licensed to operate in Ontario, Canada, and recruiters will also need to be licensed. The province delayed the original effective date of this amendment to the Employment Standards Act from January to July. Refer to the province's website for guidance on the license application process. 

 

Canadian Minimum Wage Updates for April 2024 

The federal minimum wage in Canada is set to increase as of April 1, 2024.  The anticipated national rate and those of several provinces and territories are noted below. Avionté will continue to monitor rate increases planned for additional jurisdictions in the fall. 

  • Canada (federally regulated private sectors): $16.65 -> $17.30 
  • New Brunswick: $14.75 -> $15.30) 
  • Nova Scotia: $15.00 -> $15.20  
  • Nunavut: $19.00 (new rate as of 1/1/24; potential increase anticipated April 1, 2024) 
  • Prince Edward Island: $15.00 -> $15.40 
  • Yukon: $16.77 -> $17.59 

 

Alabama

Alabama Updates Its Overtime Exemption

Effective October 1, 2024, Alabama updated the wording for the state's overtime exemption to be "in accordance with the Fair Labor Standards Act (FLSA)."  The FLSA does not have any provisions regarding double time and only mandates that overtime be paid for hours worked over 40 hours. As of October 1, 2024, if an employee has regular overtime wages, those wages will be exempt from Alabama withholding taxes.  Wages paid for double time rates will not be exempt from Alabama withholding taxes. For more information, please see Avionte's Knowledge base article on Alabama Overtime Exemption Reporting Requirements. 

 

California

California Court Upholds Independent Contractor Status 

Following years of legal disputes, California's gig companies prevail as the state's recent Supreme Court decision unanimously upheld Proposition 22, allowing employers to continue classifying workers as independent contractors, making them ineligible for benefits such as minimum wage rates, sick pay, and unemployment insurance. 

California Further Delays Healthcare Minimum Wage

California's Governor Newsom signed budget bill SB 159 on June 29, 2024, to further delay the implementation of a healthcare-specific minimum wage until at least October 15, 2024. This delay will continue until additional funding is secured or when hospital fees are increased to offset the increased minimum wage for this industry. 

California Delays Healthcare Minimum Wage Until July  

On May 31, 2024, Governor Newsome signed Senate Bill 828 that delays the effective date of the healthcare worker minimum wage increase by one month until July 1, 2024. The multi-tiered wage schedule includes required rates each year until 2033 or at the time when further adjustments are made. The delay of the statute's effective date is in response to a California budget shortfall. 

LA County Passed Predictable Scheduling Ordinance 

Effective July 1, 2025, this ordinance requires retail employers to provide schedules 14 days in advance, good faith estimates of their schedules, rest between shifts, and offers of extra hours before hiring new employees. Several jurisdictions have similar laws in effect across the nation. Employers and staffing agencies should closely monitor these laws where they operate. For more details, refer to this article by The National Law Review. 

 

California Minimum Wage Hike for Industry-Specific Workers  

California employees of fast-food restaurants (with 60 or more locations) will receive a minimum wage increase of 25% to a rate of $20/hour on April 1, 2024. This follows the January 2024 increase to the general minimum wage, which is now $16/hour. Healthcare workers will also receive an increased rate in June 2024 that will range from $21 - $23/ hour depending on the type of facilities where they work. For more information, refer to the California government website or see this article by Proskauer.  

 

California Introduces Continued COVID Compensation  

If passed, AB 3106 would require the California Occupational Safety and Health Standards Board to adopt a rule allowing workers to continue receiving pay and benefits while they are excluded from the workplace due to a positive COVID-19 diagnosis or symptoms. California employers would be required to maintain the impacted employee's seniority, benefits, and job status in addition to continuing payment of wage earnings. Refer to this article by Ogletree Deakins for more information.  

 

Colorado

Colorado Cour Decision Impacts Overtime Rates

A recent Colorado Supreme Court ruling impacts how employers should calculate overtime rates for qualifying employees. The Court decision, Hamilton v. Amazon.com Services LLC,  found that holiday incentive pay should be included in the calculation for "regular rate of pay" when determining overtime rates. The Court’s reasoning was that holiday incentive pay falls within the definition of all compensation paid to an employee. The Court agreed with the plaintiff that holiday pay classifies as a shift differential, which by law should be included in the regular rate. As a result, Colorado employers should ensure their overtime policies and calculations align with this new interpretation of the Colorado Overtime and Minimum Pay Standards (COMPS) Order. 

 

Colorado Wage & Hour Updates 

Under an amendment to the Colorado Wage Claim Act, employers immediately must pay terminated employees all wages and other compensation beyond salary that is “earned, vested, and determinable,” or face penalties up to 300% of the wages owed. A new poster/notice for the COMPS Order (Compensation, Overtime, & Minimum Pays Standards is also required and can be found on Colorado's state website. Changes to the notice include an expanded definition of "time worked," clarification of tip sharing rules, and more. 

 

Delaware

Delaware Offers Retirement Savings Program 

While employee participation is voluntary in the Delaware EARNS program, employers who do not offer a retirement plan for their (5 or more) employees are required to register by October 15, 2024. The employer portal integrates with many payroll providers to simplify plan contributions. More information about the program is available on the state EARNS website. Avionté clients can utilize these advanced queries to manage the Delaware EARNS program. 

 

Florida

Florida Increases Minimum Wage Rate

The following state is updating its minimum wage rate at the end of September.  Refer to Avionté's Knowledge Base article for more information on state and city-specific minimum wage rates. Avionté will continue to monitor for year-end updates.
 

Florida's hourly minimum wage rate increases to $13.00 effective September 30, 2024. The state wage rate for tipped workers will also be increased to $9.98 per hour.

 

Florida Employment-Related Law Signed 

Signed by Governor Ron DeSantis on April 11, 2024, Florida HB 433 will require employers to refer to state and federal agencies to govern several areas of workplace rules. The law is effective July 1, 2024, and preempts local government from passing laws related to: 

 

  • Workplace heat safety protocols beyond what is required by federal law (OSHA) 
  • Using purchasing or contracting power to influence wage rates and employee benefits 
  • Making rules about workplace scheduling and predictive scheduling for private employers 

Under this new legislation, requirements for these issues must be enacted by state legislature and the Governor. These policies cannot be implemented at the local level of government. More details can be found in this Fisher Phillips article dated 4/22/2024. 

 

Illinois

Federal Court Enjoins Portion of Illinois' DTLSA  

In response to legal action against the Illinois Department of Labor (IDOL) by a coalition of staffing agencies claiming that several provisions of the Day and Temporary Labor Services Act (DTLSA) were unreasonably costly and burdensome, portions of this law have been blocked for now. The Illinois law would have required staffing agencies to provide temporary employees the same benefits as their client's comparable employees. The plaintiffs comprised of the staffing agency coalition argued on the basis that the equivalent benefits compliance requirements were vague and did not consider the economic effect of the rules on temporary labor service providers and small businesses who employ temporary workers.  Refer to this Ogletree Deakins article for more details. 

 

*Note that the equal pay provisions (Section 42 of the DTLSA) were not impacted by the preliminary injunction order and are still enforceable as of April 1, 2024. 

Illinois Court Ruling Nixes Equal Benefits Requirement  

On March 11, 2024, a federal judge ruled that temporary staffing agencies should not be required to change their benefit plans to offer benefits equivalent to direct employees of the client (employer). This amendment to the state's Day and Temporary Labor Services Act is one of several controversial provisions that went into effect in August 2023. See American Staffing Association's article for details.

 

Kansas

Kansas Earned Wages Access Law Effective Immediately

This comprehensive earned wages access (EWA) law requires annal registration by the entity or individual who provides EWA, disclosure prior to each transaction as well as in the contract. Disclosures must contain the fact that tipping is voluntary and does not benefit. EWA providers are not allowed to report any nonpayments to consumer reporting agencies or debt collectors, nor are they allowed to charge fees, interest, or penalties. See this National Law Review article for more details.  

 

Maine

Maine Workers Can Seek Damages for Lost Wages 

A new wage law that went into effect on August 9, 2024, can require a Maine employer to pay both the unpaid wages as well as damages equal to twice the amount of those wages with interest in the event of unpaid wages to the employee. The statutory change can be reviewed as An Act to Increase Enforcement and Accountability for Wage Violations (PL 2023 c. 651). More details are available on the Maine government webpage.     

 

Maine's Mandatory Retirement Savings Program 

The state of Maine has amended its Work and Save Bill, LD 1622,  to help workers save money for retirement. The Maine Retirement Investment Trust (MERIT) is a state-implemented retirement savings plan intended to help employees who don't have access to a retirement plan and requires automatic payroll deduction contributions to a Roth Individual Retirement Account (IRA). The registration deadline is April 30, 2024, for covered employers with more than fifteen employees. For details, please visit this article by Verrill Dana LLP, a local law firm. 

 

Maryland

Maryland Proposed Predictable Scheduling Act 

The Maryland Predictable Scheduling Act (SB 994) is intended to bolster hourly service workers' rights by providing them with advanced notifications about work schedules and compensation for schedule changes. This proposed legislation attempts to find a balance between workers' rights and employer flexibility.   

 

Minnesota

Minnesota Wage Detail Reports Due 10/1/24

While benefits will not be available for Minnesota's Paid Family Leave until January 1, 2026, the initial quarterly wage reports are due from employers beginning October 1, 2024. The first wage detail reports will be based on wages paid between July 1 – September 30, 2024. The reports, including total wages paid and total hours worked, should be submitted to Minnesota’s Department of Employment and Economic Development. It's worth noting that some late amendments to the bill (HF5363) included an increased payroll tax contribution from 0.7% to 0.88%, at least half of which must be paid by the employer. For more details, refer to the Minnesota state FAQ document.  

 

Minneapolis, MN Establishes Minimum Compensation for Drivers 

Transportation Network Company (TNC) drivers must pay drivers within the city of Minneapolis a minimum of $1.40 per mile and $.51 per minute for the time spent transporting a rider, or $5.00, whichever is greater. This and other rate standards for rideshare drivers were effective as of April 1, 2024, under Title 13, Chapter 343 of the Minneapolis Code of Ordinances relevant to Transportation Network Companies. 

 

New Jersey

New Jersey Secure Choice Savings Program Act 

This Act established a state-sponsored program that is designed to help private-sector employees save for retirement. Participation in RetireReady NJ is required for employers who don't offer their own qualified retirement savings plan. The registration deadline for employers with 40 or more employees is September 15, 2024, while employers with 25 to 39 employees must register by November 15, 2024. Avionté clients can manage the New Jersey Secure Choice Program by utilizing these advanced queries described in our Knowledge Base. 

 

New Jersey Institutes Domestic Workers' Bill of Rights 

The recently enacted companion bills (S723/A822) took effect for New Jersey employers on  July 1, 2024, and they require notices for domestic workers, in addition to required meal breaks, unpaid time off after six consecutive days of work for the same employer, and minimum notice requirements. 

 

New York

New York Wage & Hour Updates 

Recent salary basis threshold updates for New York overtime exemptions, pay frequency exemptions, as well as minimum wage updates are in effect: 
 

  • New York State's Department of Labor (NYDOL) approved new minimum salary thresholds for exempt executive and administrative workers, which will increase each year through 2026. 
  • As of December 31, 2023, the new minimums are $1,200/week in New York City and Nassau, Suffolk, and Westchester counties, and they are set at $1,124.20/week for the rest of the state. 
  • Effective March 13, 2024, the salary thresholds for exemptions from pay frequency laws rose from $900/week to $1,300/week. 

 

These increased executive and administrative employee salary thresholds come as New York’s minimum wage rose on January 1, 2024, to $16/hour for New York City and the remainder of downstate (Nassau, Suffolk, and Westchester counties) compared to $15/hour for the rest of the state. 

 

Separately, there is a salary basis threshold that governs certain exemptions such as pay frequency and other wage protections in New York under Article 6 of the New York Labor Law (NYLL). This threshold increased from $900 to $1,300 per week as of March 13, 2024. Related to pay frequency, New York law requires “manual workers” (a term broadly defined by the NYDOL) to be paid at least weekly. Other employees who do not meet the executive, administrative, and professional salary exemptions and other nonmanual employees must be paid at least semimonthly. Notably, pay frequency litigation is on the rise. 

 

Rhode Island

State Minimum Wage for Rhode Island Domestic Workers 

Governor Daniel McKee has signed a new law that eliminates the previous existing provision that excludes domestic workers from qualifying for minimum wage and overtime protections under Rhode Island law. The guaranteed rate for domestic workers was the federal minimum wage of $7.25 per hour, and it will increase to the state minimum wage of $14 per hour effective immediately under HB 7532. Rhode Island's wage rate is slated to increase to $15 per hour in January 2025. See this article in The National Law Review for more information. 

 

South Carolina

South Carolina Decision Heightens Risk with Independent Contractors 

In a recent court decision (Ruh v. MRS / Nucor Corporation), the South Carolina Supreme Court's response was that "an independent contractor relationship may be subject to liability for physical harm proximately caused by the principal's own negligence in selecting the independent contractor." Based on this finding, it is recommended to bolster your contracts by adding indemnification clauses and warranty provisions ensuring that independent contractors are properly vetted with respect to applications, background checks, driving records, training, and certifications. Employers should also consider increasing their insurance coverage for additional protections. More information can be found in this article. 

 

Washington

Renton, WA Creates a Minimum Wage Ordinance 

Effective July 1, 2024, the city of Renton, Washington has established a minimum wage of $20.29 for large employers and $18.29 for other covered employers. The ordinance also requires employers to offer current employees additional work hours before hiring new employees. 

Washington Warehouse Employee Protections 

Effective July 1, 2024, the state of Washington's HB 1762 now regulates workers' use of production quotas. In addition, the law, codified as Chapter 49.84 RCW, has notice requirements and recordkeeping impact for employers, and it designates what type of activities must be considered payable for wage purposes such as meal and rest breaks, restroom breaks, time to access tools and equipment, in addition to the time to takes to perform the duties of the job. For more information, refer to The National Law Review article. 

 

Washington D.C.

Washington, D.C. Minimum Wage Rates Increase 

The minimum wage rate for D.C. employees will increase from $17.00 to $17.50 as of July 1, 2024. The base hourly rate for tipped employees will go from $8.00 to $10.00, and employers will have to pay the difference for those tipped employees whose earnings added to the minimum wage do not meet that threshold. More details can be found in this Lexology article. 

 

Wisconsin

Wisconsin Wage and Hour Updates 

Under Wisconsin's Senate Bill 616, withholding thresholds for nonresident employees will increase such that no withholding is required for nonresident employees whose annual wages total less than $2,000. Wisconsin's Assembly Bill 574 will also require licensure before providing earned wage access services. Additional standards for providers will also be instituted under this law.  

 

 

 

3rd party link Disclaimer: These links are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Avionté of any of the products, services or opinions of the corporation or organization or individual. Avionté bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. Contact the external site for answers to questions regarding its content. 

Articles in this section

Was this article helpful?
0 out of 0 found this helpful
Share

Comments

0 comments

Please sign in to leave a comment.