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  • The Internal Revenue Service (IRS) has recently released the 2024 Form 941, Employer’s Quarterly Federal Tax Return, along with Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors, and Schedule R, Allocation Schedule for Aggregate Form 941 Filers. These updated forms, along with instructions, are now available here.

    As a business owner, learn how these changes will affect your tax reporting by reading on.

    What Employers Should Know

    Employers are advised to start using the March 2024 revision of Form 941 beginning with the first quarter of 2024. The IRS expects this revision to be utilized for all four quarters of the year. In addition, a notable change is the removal of COVID-19-related lines from the Form 941. This means the lines previously used to report COVID-19-related credits have been eliminated from the form. Employers will need to be mindful of this adjustment when completing their tax returns for 2024.

    Form instructions update

    The Form 941 instructions have been updated to align with the changes to the form. In addition, the updated instructions no longer include any worksheets. Employers should familiarize themselves with the revised instructions to ensure accurate completion of the form.

    Implications

    Employers are encouraged to familiarize themselves with the updated Form 941 and related schedules to ensure compliance with the latest reporting requirements. They may also need to review and adjust their internal processes and systems to accommodate the changes introduced in the updated forms. This could involve updating payroll and tax reporting software and training staff on the revised requirements to facilitate smooth and accurate reporting.

    Where GMS Steps In

    Given the dynamic nature of tax regulations, employers should stay informed about further updates or clarifications related to the revised forms. Regularly monitoring official IRS communications and updates can help employers stay ahead of any additional changes that may impact their tax reporting obligations.

    However, partnering with a professional employer organization (PEO) like GMS is here to take on this administrative task that, let’s face it, you don’t want to worry about. Our HR experts offer comprehensive HR, payroll, and compliance solutions that provide small business owners with expertise in managing tax-related matters. Small business owners can leverage the resources of a PEO to ensure seamless adaptation to the revised forms and instructions. This allows business owners to focus on their core business operations, knowing their tax reporting requirements are being effectively managed. Stay on top of regulatory changes and partner with GMS – contact us today.

  • Tax season can be a stressful time for many employees. In fact, a survey showed that 64% of individuals who were surveyed admitted that tax season introduced a level of stress to their lives. As a small business owner, you can support your employees during this period in several ways, helping them navigate the complexities of tax filing and ultimately boosting their morale and productivity. The following are five effective ways to assist your employees during tax season.

    1. Provide clear guidance and resources

    • Educate your employees: Offer informational sessions or workshops to educate your employees about tax-related matters such as deductions, credits, and filing procedures. Providing access to reliable online resources or inviting tax professionals to address common concerns can be immensely beneficial.
    • Clarify tax forms: Ensure your employees receive their W-2 form promptly and offer assistance in understanding the information provided. In addition, provide clear instructions for any other tax-related documents they may need to submit.

    2. Offer flexible work arrangements

    • Flexible schedules: Allow employees flexibility in their work schedules to accommodate tax-related appointments or personal time needed to organize their finances. This can alleviate the pressure of balancing work responsibilities with tax obligations.

    3. Support financial wellness

    • Financial counseling: Consider providing access to financial counseling services or workshops to help employees better understand their financial situation, including tax planning and budgeting.
    • Tax preparation assistance: Offer to cover the cost of professional tax preparation services for employees or negotiate group discounts with local tax preparers. This can alleviate the burden of navigating complex tax laws and regulations.

    4. Recognize and reward dedication

    • Acknowledge hard work: Recognize your employees’ efforts during tax season and express appreciation for their dedication and hard work, whether through verbal recognition, small tokens of appreciation, or additional time off once the tax season has concluded.
    • Incentive programs: Consider implementing incentive programs tied to tax season productivity or accuracy, such as bonuses or extra paid time off for exemplary performance during this challenging period.

    5. Foster open communication

    • Encourage dialogue: Create an open and supportive environment where employees feel comfortable discussing their concerns about tax-related stress. Encourage managers to check in with their team members regularly to offer guidance and support.
    • Seek feedback: Request feedback from employees about their experiences during tax season and use their input to continually improve the support you provide in future tax seasons.

    By implementing these strategies, small business owners can demonstrate their commitment to the well-being of their employees and help alleviate the stress associated with tax season. Supporting employees through this challenging time not only fosters a positive work environment but also contributes to enhanced employee satisfaction and loyalty.

    As a small business owner, prioritizing your employees’ well-being during tax season can yield long-term benefits, including improved morale, increased productivity, and a stronger sense of loyalty and dedication among your team. Remember, by investing in your employees’ well-being, you’re investing in the success and sustainability of your business.

    One Final Consideration

    While the five items listed above are great options to help support your employees during tax season, consider partnering with a professional employer organization (PEO) instead. A PEO like GMS is your one-stop shop for a smoother and more efficient tax season for you and your employees. PEOs provide their expertise in payroll management, tax compliance, and employee benefits administration, ultimately lifting the administrative burden off the business owner’s shoulders and ensuring all tax-related processes are handled accurately and efficiently. Through partnerships with PEOs, business owners can streamline their tax-related responsibilities, allowing their employees to focus on their work with peace of mind and contributing to a more efficient work environment. Contact our experts today!

  • The Internal Revenue Service (IRS) has recently unveiled a voluntary disclosure program for employers who mistakenly claimed the Employee Retention Credit (ERC). The ERC, a refundable tax credit, was designed to aid businesses that faced hardships due to closures and event cancellations mandated by state and local governments during the pandemic.

    Understanding The Issue

    Despite the noble intent behind the ERC, numerous employers who were ineligible for the credit applied for and received funds. This was partly due to misinformation provided by scammers. As a result, the IRS initiated a disclosure program to rectify these erroneous claims, which is open for participation until March 22nd, 2024.

    Consequences Of Erroneous Claims

    Employers who erroneously claimed the ERC face multiple repercussions, ranging from financial penalties to potential criminal investigations. If the funds have not been received, employers can withdraw their ERC claim, essentially nullifying the claim. Completing the voluntary disclosure paperwork and returning 80% of the total credit is necessary for those who have already received the funds.

    However, failure to rectify these claims may lead to audits by the IRS and subsequent demands for the full refund of the credit, along with interest and potential penalties. In cases of fraud, employers could even face criminal investigations and prosecution for submitting false tax claims to the IRS.

    Eligibility Criteria For The ERC

    To qualify for the ERC, a business must meet one of the following criteria:

    • Sustained a full or partial suspension of operations due to a government order limiting commerce, travel, or group meetings because of COVID-19 during 2020 or the first three quarters of 2021
    • Experienced a significant decline in gross revenue during 2020 or a decrease in gross revenue during the first three quarters of 2021
    • Qualified as a recovery startup business for the third or fourth quarters of 2021

    In addition, certain agencies, such as government agencies and employers that faced supply chain disruptions but did not experience a government-ordered suspension of operations, are not eligible for the credit.

    Challenges And Confusion

    Determining eligibility for the ERC can be challenging for employers, particularly in assessing the significance of revenue downturns or operational slowdowns. The complexity of this criteria has led to confusion among employers, with many unsure if they were rightfully entitled to the credit.

    The situation has been worsened by aggressive marketing tactics employed by some firms, which encouraged businesses to apply for credit even if they were not eligible. Employers were enticed with promises of substantial funds, often at the request of marketers who stood to gain a percentage of the claimed tax credit.

    Recommendations And Guidance

    Given the complexities and potential pitfalls associated with the ERC, it’s crucial for employers to seek guidance from trusted tax advisors. Advisors who do not stand to benefit from the credit can offer unbiased counsel, helping employers navigate eligibility requirements and make informed decisions.

    In light of the IRS’ voluntary disclosure program, employers are urged to take a close look at their ERC submissions and reassess their eligibility with the assistance of legal, accounting, and HR professionals. This presents a limited window of opportunity for employers to rectify any erroneous claims and avoid potential repercussions.

    In addition, it’s essential for employers to be aware that wages reported as payroll costs for the Paycheck Protection Program (PPP) loan forgiveness cannot be used to claim the ERC. The PPP, established by the CARES Act, provides small businesses with funds to pay up to eight weeks of payroll costs, including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.

    Looking For Assistance?

    The IRS’ new voluntary disclosure program offers employers an opportunity to rectify erroneous ERC claims and avoid potential legal and financial consequences. By seeking expert guidance and carefully reassessing their eligibility, employers can navigate this complex landscape with confidence and integrity. Not sure where to start? GMS, a certified professional employer organization (CPEO), provides business owners with valuable assistance and guidance. The following are several ways GMS can support businesses through this process:

    • Expert guidance on eligibility: GMS can provide expert advice on the eligibility criteria for the ERC, helping businesses assess their qualifications for the credit based on the specific requirements outlined by the IRS.
    • Compliance support: GMS is equipped to ensure that businesses comply with the ERC’s stringent guidelines. They can help employers navigate the complex compliance landscape, minimizing the risk of errors and ensuring adherence to the program’s terms.
    • Strategic advisory services: GMS can offer strategic advisory services, guiding employers on the best course of action regarding their ERC claims and voluntary disclosure.

    Contact our HR experts today to learn more.

  • Small business owners have the opportunity to evaluate their processes and find ways to enhance efficiency and productivity. While reflecting on your operations, you may realize that payroll management demands more attention than you initially thought. Let’s face it: you didn’t start your business to become an expert in payroll and spend countless hours on processing. Whether in construction, manufacturing, health care, plumbing, or any other industry, payroll is likely the last task you want to spend your precious time on. You started your business for a reason, driven by passion or a need you identified, and running payroll probably wasn’t part of that vision.

    Fortunately, outsourcing your payroll processes can be the solution you’ve been looking for. You might be unfamiliar with what outsourcing entails, or perhaps you’ve been bombarded by outsourcing companies claiming to be your payroll saviors. It may seem too good to be true, but we’re here to share the truth! Continue reading to explore the benefits of outsourcing your payroll and how it can save you countless hours.

    What Is Payroll Outsourcing?

    Let’s start with the basics: what is payroll outsourcing? Payroll outsourcing is the practice of delegating payroll-related tasks to a third-party service provider such as a professional employer organization (PEO). Instead of handling payroll in-house, businesses can entrust this crucial responsibility to experts specializing in payroll management. These outsourcing companies have the knowledge, resources, and technology to efficiently handle payroll processes such as:

    • Wage calculation
    • Tax deductions
    • Issuing payment to employees
    • And more!

    Outsourcing your payroll processes allows business owners to free up valuable time, enabling them to focus on their core operations and strategic goals. In addition, payroll outsourcing ensures compliance with ever-changing tax regulations and reduces the risk of errors or discrepancies. It offers a seamless and streamlined solution that eliminates the hassle and complexity associated with managing payroll internally.

    Now, let’s explore the five signs your business needs to outsource payroll.

    1. You Don’t Have Enough Time

    Handling payroll in-house can be a time-consuming and complex task. Small business owners often find themselves dedicating countless hours to managing payroll, which takes away valuable time from other critical business functions. According to The Business Journals, a survey found small business owners spend 5 hours or more each pay period or 21 days each year managing payroll. When you outsource your payroll, business owners can free up this time and allocate it towards activities that directly contribute to their business growth.

    In addition, outsourcing payroll eliminates the need to hire and train specialized staff, invest in payroll software, and constantly update systems to comply with changing regulations. These costs can quickly add up for small businesses. Instead, by opting for payroll outsourcing, business owners can redirect these resources towards areas that help their business thrive, such as product development, customer service, or marketing efforts.

    2. You Struggle Keeping Up With Regulatory Demands

    Payroll management requires a deep understanding of complex tax laws and regulations. Mistakes in payroll calculations or non-compliance with legal requirements can lead to severe consequences, including penalties, fines, and damage to the business’s reputation. By outsourcing payroll to experts who specialize in this field, small business owners can ensure accurate and timely payment of wages, taxes, and benefits. 40% of small businesses pay an average of $845 annually in IRS penalties because of mismanaged payroll processes.

    On the bright side, payroll outsourcing providers stay up-to-date with the latest regulatory changes, ensuring that businesses remain compliant at all times. They have the knowledge and expertise to handle tax filings, deductions, and reporting requirements, minimizing the risk of errors or oversights. This accuracy saves businesses from potential financial losses and provides peace of mind.

    3. You Need Security And Confidentiality

    Data security is a critical concern for businesses, regardless of their size. Payroll outsourcing providers invest heavily in robust data security measures to protect sensitive employee information. To safeguard data from unauthorized access, breaches, and identity theft, they utilize the following:

    • State-of-the-art technology
    • Secure servers
    • Encryption protocols

    By outsourcing payroll, small business owners can benefit from the expertise and resources of these providers, ensuring their payroll data is handled with confidentiality. This allows business owners to focus on their core activities, knowing that their employees’ personal and financial information is secure.

    4. Your Business Is Growing

    As businesses grow and evolve, the complexity of payroll management increases. Outsourcing payroll offers scalability and flexibility, allowing small business owners to adapt to changing needs without disruptions. Whether adding new employees, accommodating seasonal variations, or expanding into new markets, outsourcing providers can quickly scale their services to meet the requirements.

    Outsourcing providers have the infrastructure and resources to handle payroll for businesses of all sizes. They’re equipped to manage payroll across multiple locations, handle different pay structures, and integrate with various HR systems. This flexibility ensures that payroll processes remain seamless and efficient, regardless of fluctuations in the business landscape.

    5. You Need Access To Expert Support

    Payroll outsourcing providers not only handle routine payroll tasks but also provide expert support and advice. Their team of professionals specializes in payroll management and stays updated with industry trends, regulations, and best practices. This expertise is invaluable for small business owners who may not have dedicated payroll staff or the time to stay informed about the ever-changing payroll landscape.

    When business owners outsource their payroll, they gain access to a team of experts who can address any payroll-related queries, provide guidance on compliance, and assist with complex issues such as tax filings, benefits administration, and regulatory requirements. This support ensures that small business owners can make informed decisions, minimize potential risks, and maximize efficiency in their payroll processes.

    Meet Group Management Services (GMS)

    Long story short, if you’re a small business owner, consider partnering with a PEO. If you want to free up your time for the first time in who knows how long, you’ve come to the right place. I get it; it seems too good to be true, but it is the truth. Say goodbye to restless nights wondering about the what-ifs and what could’ve been. We’re here to bring your dreams to life.

    By entrusting payroll-related tasks to experienced professionals like GMS, businesses can save time, resources, and energy that can be redirected toward their core operations and strategic goals. Not to mention, we ensure compliance with complex tax regulations, minimize the risk of errors or discrepancies, and provide a seamless and streamlined payroll management solution. Stop thinking about it and get a quote from us today. You’re one click away from a brighter future!

  • Effective payroll management is one of the most essential parts of operating a successful business. It’s a complex process that, if mishandled, can result in serious legal repercussions, fines, and reputational harm. Payroll responsibilities go beyond the distribution of paychecks; they encompass a range of regulatory compliance and detailed record-keeping that can be confusing.

    As you prepare for the year ahead, it’s the perfect time to review your payroll processes and ensure your business has an efficient payroll system in place. This will help ensure compliance, foster employee trust, and ultimately contribute to the overall health of your business.

    To navigate the complexities of payroll, many small business owners turn to partnerships with professional employer organizations (PEOs). These organizations have expertise and specialized tools designed to streamline the payroll process and maintain compliance and efficiency. However, if you’re determined to tackle payroll alone, there are a few common errors you should be aware of.

    Common Payroll Mistakes To Avoid

    Employee misclassification is one of the most frequent pitfalls employers make. Employee classification is a framework used to categorize workers, which in turn dictates their pay structure and tax obligations. This classification also plays a role in determining eligibility for company benefits and differentiates between U.S. citizens and non-citizens.

    Under the Fair Labor Standards Act (FLSA), employers must categorize their employees as either exempt or non-exempt. Exempt employees typically receive a salary and are not subject to overtime and minimum wage laws. In contrast, non-exempt employees are paid hourly and are entitled to overtime pay and minimum wage protections. Misclassifying employees can result in over or underpaying your staff. Additionally, it can cause issues when determining if an employee receives benefits and overtime.

    In addition to exempt vs. non-exempt classification, another error is classifying an individual as an independent contractor rather than an employee. This misclassification can be costly as you will have to make back payments or other adjustments to rectify that employee’s pay. This not only affects the financial aspect of a business but can also have legal and reputational consequences.

    Hourly tracking and overtime

    Overtime compensation (1.5 times the regular pay) is mandatory for the following: 

    • Employees clocking in more than 40 hours per week
    • Work performed during designated breaks 
    • Travel time spent moving between job sites
    • Participation in activities beyond usual work hours, such as team-building events, training sessions, or other company-sponsored activities. 

    For non-exempt employees, meticulous tracking of work hours and any overtime is a legal obligation. Without close monitoring, you risk over or underpaying your staff, leading to a lengthy and complex correction process. It can also be uncomfortable for employees who might have to repay the company.

    Poor record keeping

    Keeping accurate records is a must for any business, especially regarding payroll. Under the FLSA, employers must keep accurate pay records for at least three years. These records should include specifics such as the number of hours worked, pay rates, and the dates of each payroll period. It’s a critical step to maintain compliance with labor laws and ensure everything’s squared away if any questions or issues arise down the line.

    Miscalculations

    It’s critical to double-check your team’s pay. Ensure you have the right tax rates, calculate overtime correctly, and understand how deductions should be applied. Payroll errors can be a hassle, but by taking the time to ensure everyone is paid correctly, you can save yourself a lot of headaches later on.

    Inaccurate paperwork

    Employees must complete W-2 forms to ensure accurate documentation of benefit withholdings, 401(k) plans, and health spending accounts (HSAs). Employees rely on their W-2s to file their annual tax returns; even a single mistake can lead to considerable complications and annoyance for you and your employees. Ensuring the accuracy of these forms is crucial for a smooth tax filing process.

    Missing deadlines

    According to Form 941, employers must make payroll tax payments periodically throughout the year. The frequency of these payments, whether monthly, semiweekly, or on the next day, depends on your total payroll amount and how long your business has been operating. Make sure you understand which depositor category applies to your business and adhere strictly to the corresponding deadlines. Neglecting to meet these payment obligations can result in substantial fines and legal consequences, which could be detrimental to your business.

    Garnished wages

    It’s important to understand that not all wage garnishments are handled in the same way. Obligations such as fines, taxes, and child support each have their own set of rules that can vary by state. You must adhere strictly to the instructions given by the issuing authority, such as the Internal Revenue Service (IRS), a state tax agency, or the U.S. Department of Education.

    Incorrectly handling your employees’ wage garnishments, such as neglecting to file or filing improperly, can have serious consequences. You could face legal judgment against your business that requires you to pay the total amount of the employee’s debt, meaning this isn’t something you can afford to mismanage.

    In addition to the common mistakes mentioned here, there are many less common mistakes we haven’t covered. So, it’s essential to keep a watchful eye over your payroll practices. Ensure you have robust systems in place and stay up-to-date on new laws and regulations in your area to remain compliant. Set yourself up for success next year by conducting a detailed review and audit of your payroll operations.

    How GMS Can Help 

    For small business owners, managing payroll and tax filings can be one of the most time-consuming and challenging tasks. Through expert payroll management services, GMS can save time and give you peace of mind. 

    We seamlessly blend proprietary technology with dedicated HR services and support from our expert employees. We offer: 

    • Payroll processing
    • Payroll software
    • Payroll tax management
    • Employee self-service

    Stop spending time worrying about payroll and start spending time growing your business. GMS is more than just another payroll management company – we’re a PEO that provides comprehensive HR solutions to solve your payroll and other administrative issues. Contact us today!

  • The Internal Revenue Service (IRS) unveiled its annual adjustments for the upcoming year, and among the updates include the changes in transportation fringes and flexible spending arrangements (FSAs). These changes outlined in Rev. Proc. 2023-34, released on November 9th, 2023, shed light on the cost-of-living adjustments (COLAs) for 2024, signaling notable shifts in various financial parameters. A COLA is an increase made to Social Security and Supplemental Security Income (SSI) to counteract the effects of inflation.

    Enhancements In Transportation Fringes And Qualified Parking

    In 2024, employers can exclude from gross income amounts related to qualified transportation fringe benefits and parking. The new threshold for exclusion has risen to $315 per month, a substantial jump from the previous year’s $300. This upward adjustment reflects the evolving landscape of transportation costs and seeks to provide individuals with additional financial flexibility.

    Flexibility And Expansion In Flexible Spending Arrangements (FSAs)

    The changes don’t stop there. The dollar limitation for voluntary employee salary reductions saved for contributions to health FSAs has been raised to $3,200 for plan years starting in 2024, up from $3,050 in 2023. This upward revision allows individuals to allocate more pre-tax income toward their health care expenses, potentially alleviating the financial burden of medical costs.

    In addition, for those utilizing cafeteria plans allowing the carryover of unused amounts in FSAs, the maximum carryover amount has been adjusted to $640, up from $610 in the previous year. This enhancement in the maximum carryover amount allows individuals to retain a more significant portion of their unspent funds, providing a safety net for unforeseen medical expenditures.

    Additional information about the complete coverage will be in Payroll Currently.

    Implications For Employers And Individuals

    Employers will need to reassess their benefit offerings and adjust them in accordance with the updated limits. This entails revisiting policies related to transportation benefits, FSAs, and cafeteria plans to ensure compliance with the new thresholds. In addition, individuals should leverage these revised limits to optimize their tax savings and health care budgeting for the upcoming year.

    The Assistance Of A PEO

    The 2024 IRS cost-of-living adjustments bring pivotal changes in transportation fringes and FSAs, offering avenues for optimized tax planning and health care budgeting. However, for businesses navigating these updates, the complexities might be challenging. Fortunately, a professional employer organization (PEO) like GMS is here to help. A PEO assists with ensuring compliance with these revisions and provides expertise in managing benefits, payroll, HR, and the intricacies of changing regulations. Collaborating with a PEO can empower businesses to seamlessly adapt, leveraging these updates to enhance employee benefits and streamline operations with evolving IRS standards. Embracing these changes with the support of a PEO could be the catalyst for businesses to thrive in the dynamic financial landscape of 2024 and beyond. Contact our HR experts today to learn more.

  • The Alabama Department of Revenue’s Income Tax Administration has recently announced three rules set to reshape the landscape of overtime wages and withholding taxes. With an effective date of December 3rd, 2023, these changes usher in a new era for employers and employees, significantly altering how overtime wages are handled for tax purposes.

    Diving Deeper Into The Law

    One of the most notable changes comes in the form of Ala. Admin. Code r. 810-3-72-.01, where the Department of Revenue has amended existing rules to exclude the entirety of overtime wages paid to full-time hourly employees from Alabama withholding tax. This shift marks a departure from the previous requirement that employees engaged in exempt and nonexempt work have either all or none of their earnings taxed. The amended rule, effective from January 1st, 2024, through June 30th, 2025, does not apply to salaried or alternative payment methods.

    Qualifications And Definitions

    To provide additional clarity for employers, Ala. Admin. Code r. 810-3-72-.02 introduces new definitions and qualifying information. The rule defines an hourly wage-paid employee and clarifies that gross income will not include amounts received for hours worked over 40 per week, even if paid at the regular rate. In addition, the exclusion of paid time off (PTO) and holiday pay from determining hours worked over 40 per week adds an extra layer of nuance to the exemption calculation.

    The rule also has exceptions for salaried employees, those compensated through alternative methods, and those receiving commissions and bonuses in addition to an hourly wage. These distinctions aim to provide a comprehensive framework for employers navigating the complexities of overtime wage calculations.

    Reporting Requirements

    Alabama employers now face enhanced reporting requirements, as outlined in the Department of Revenue’s third rule, amending Ala. Admin. Code r. 810-3-74-.01. Beginning January 1st, 2024, employers must report the total amount of exempt overtime wages for the filing period and the total number of employees who received such wages. These requirements apply to monthly and quarterly filings (via Form A-6 or Form A-1, respectively), placing an increased burden on employers to ensure accurate and timely reporting.

    Embracing Technological Advances

    Acknowledging the need for efficient reporting, the Department of Revenue’s third rule allows employers to comply with the new reporting requirements electronically. Encouraging the use of electronic filing for Form A-6 and Form A-1, employers can now seamlessly report total exempt overtime wages and the number of employees receiving such payments through the Department of Revenue’s website.

    Closing The Compliance Gap

    Alabama’s recent change to overtime wage regulations introduces a paradigm shift for employers, requiring meticulous attention to compliance and reporting. The amendments to withholding tax rules underscore the need for businesses to stay on top of evolving legislation. As these changes take effect, small business owners face the challenge of navigating intricate reporting requirements, which is where a professional employer organization (PEO) comes in. PEOs like GMS specialize in managing HR-related tasks, ensuring compliance with ever-changing laws, and providing valuable support in navigating complex regulations. By partnering with GMS, small business owners in Alabama can streamline their operations, reduce administrative burdens, and focus on what matters most – growing their business in a dynamic and competitive landscape. Contact GMS’ compliance experts today.

  • As of January 1st, 2024, California will be ushering in a new era of employee rights and benefits. Thanks to Senate Bill 616, a groundbreaking piece of legislation passed in 2023, significant changes are coming to the state’s paid sick leave (PSL) policies. These changes represent a huge win for employees across California, as they mark a significant increase in PSL entitlements, accrual caps, and front-loading options. Continue reading to learn more about this law and what it means for California business owners and employees.

    Increased PSL Entitlement

    The most notable change that employees will enjoy under the revised law is an increase in PSL entitlement. Previously, employees were entitled to 24 hours or three days of paid sick leave per year. With the new law taking effect, this entitlement will jump to a more substantial 40 hours or five days of paid sick leave per year. This adjustment ensures that employees have more time to take care of their health and well-being without worrying about lost income.

    Accrual Cap And Front Loading

    In addition, the new law introduces changes to the accrual cap and front-loading options. In the past, employees could accrue up to 48 hours or six days of PSL per year. This cap will now be raised to 80 hours or 10 days per year. This means that employees will be more flexible in managing their paid sick leave and can accumulate more time for unforeseen health issues.

    Front-loading is another exciting aspect of this law. Front-loading means employers give employees their paid sick leave hours in one lump sum at the beginning of the year. If employers choose to front-load PSL for their employees, the law mandates specific timelines for doing so. By the 120th calendar day of employment, employees must receive no less than 24 hours of PSL. By the 200th calendar day, they should have a total of 40 hours of PSL. This feature ensures that employees can access their PSL benefits early in their employment, offering peace of mind from the very beginning.

    Rate Of Accrual

    The rate of PSL accrual remains unchanged, with employees earning one hour of PSL for every 30 hours worked. This fair system ensures that employees accrue their benefits gradually over time, aligning with their actual working hours.

    Local PSL Laws Preemption

    Another significant aspect of the new law is the prohibition of local PSL laws from regulating certain issues related to PSL. This means that state law will take precedence over any local regulations, creating a more uniform system across the entire state. While local laws were once a patchwork of rules and regulations, this new provision will streamline PSL policies and make it easier for employees and employers to understand their rights and obligations.

    Navigating The Changing Landscape

    With these significant changes in California’s paid sick leave laws, business owners might wonder how they can best navigate the evolving landscape while ensuring compliance and providing the best benefits to their employees. If you’re a business owner in California wondering this, we’re here to share the benefits of partnering with a professional employer organization (PEO) like GMS. GMS’ HR experts assist with HR management, employee benefits, and navigating the intricate maze of labor law compliance. We guide business owners to streamline their operations, stay ahead of evolving regulations, and foster an empowering work environment.

    Partnering with GMS amidst this complex landscape of California equips business owners to seamlessly transition into the new PSL era. This ensures not only compliance with laws and regulations but also the ability to allure and retain top-tier talent in the competitive job market. Interested in learning more? Contact our HR experts today.

  • To ensure fair compensation for tipped employees, the Chicago City Council passed the “One Fair Wage” ordinance on October 6th, 2023. This legislation, which aims to eliminate the subminimum wage for tipped workers in Chicago by July 1st, 2028, will fundamentally reshape the compensation landscape for thousands of individuals employed in service-oriented industries. The ordinance, which commences its phased implementation on July 1st, 2024, is poised to challenge the long-standing practice of tipping and the structure of the city’s restaurant industry. Continue reading to explore the intricacies of this significant policy shift and the various perspectives surrounding it.

    Understanding The Subminimum Wage

    At this time, employers of tipped workers in Chicago can apply for a credit against the standard minimum wage rate. This credit, commonly known as the “tip credit,” allows employers to pay a lower hourly wage to tipped workers if their tips, combined with their direct pay, bring their earnings up to the city’s minimum wage. For employers with at least 21 employees, the subminimum wage for tipped employees is $9.48 per hour, constituting a 40% credit against the standard minimum wage of $15.80 per hour. Smaller employers with more than three but fewer than 21 employees pay a subminimum wage of $9.00 per hour, a 40% credit against the standard minimum wage of $15.00 per hour.

    The Phased Approach

    With the passing of the “One Fair Wage” ordinance, the tip credit is set to be reduced in stages:

    1. 40% of the applicable minimum wage rate until July 1st, 2024
    2. 32% of the applicable minimum wage rate on and after July 1st, 2024
    3. 24% of the applicable minimum wage rate on and after July 1st, 2025
    4. 16% of the applicable minimum wage rate on and after July 1st, 2026
    5. 8% of the applicable minimum wage rate on and after July 1st, 2027, until and including June 30th, 2028

    By July 1st, 2028, employers will no longer be able to take a tip credit of any amount, and the standard minimum wage will apply to all employees in customarily tipped occupations. Tipped employees, however, will still be entitled to earn and retain their tips.

    Challenges For Restaurant Employers

    The “One Fair Wage” ordinance represents a significant challenge for restaurant employers, especially in Chicago’s vibrant dining scene. Initially introduced with a two-year phaseout period, the substitute measure passed on October 6th provides additional time for the city’s hospitality industry to adapt to the impending changes. The Illinois Restaurant Association has voiced concerns, warning that eliminating the subminimum wage will fundamentally alter the business model of every restaurant in the city.

    Proponents of the ordinance cite data from other regions that have already eliminated the tip credit, suggesting that service workers’ take-home pay increases and staff turnover decreases. However, critics point out that the reality may be more nuanced. For instance, the Illinois Restaurant Association notes that a median tipped worker in a full-service restaurant in the state already makes $28.48 per hour. In cities that have abolished the tipped minimum wage, the average tip percentages tend to be lower, which can result in reduced take-home pay for servers. For example, San Francisco, California, saw an increase in restaurant closures after eliminating the tipped minimum wage.

    Potential Responses And A Growing Trend

    As Chicago restaurants face this transformative change, they may adopt automatic service charges to offset the financial impact, a practice already prevalent in Washington, D.C., after the tip credit was eliminated there. Some may consider eliminating servers altogether, shifting to a self-serve or counter model, or relocating to nearby municipalities outside the city.

    This initiative in Chicago is part of a broader trend to eliminate the tip credit, which has been gaining momentum in recent years. Although federal legislation to eliminate the subminimum hourly wage for tipped workers failed in the 2021-22 session, more than a dozen states have legislation pending to abolish the tip credit, and several states already prohibit the subminimum wage. The District of Columbia and Portland, Maine, have also ventured into this territory, with contrasting outcomes.

    A Helping Hand In Adapting

    The “One Fair Wage” ordinance in Chicago is poised to reshape the compensation landscape for tipped employees, prompting a robust debate about its potential impact on the service industry. While the industry grapples with the changes ahead, another facet to consider is how businesses can navigate these transformations effectively. Professional employer organizations (PEOs) like GMS are a valuable resource for companies in Chicago, helping them adapt to evolving employment laws, including those related to minimum wages and tipping practices. GMS offers comprehensive HR solutions, allowing business owners to focus on their core operations while ensuring compliance with changing labor regulations. With the phased elimination of the tip credit on the horizon, GMS can be a strategic partner for businesses, helping them navigate these changes while maintaining the highest employment standards and fair compensation for their employees. As the “One Fair Wage” initiative unfolds, businesses in Chicago must stay agile and informed, and PEOs can be an ally in this process. Interested in learning more? Contact us today.

  • In an effort to promote fairness and transparency in the workplace, the Colorado Department of Labor and Employment is taking significant steps by using proposed Equal Pay Transparency (EPT) Rules. These rules aim to provide clarity regarding Colorado’s Ensure Equal Pay Act for Equal Work Act, which becomes effective on January 1st, 2024. The Act, which amended the state’s pay transparency statute, brings much-needed attention to the issue of pay equity and gender discrimination in the workplace. Continue reading to learn more about the proposed rules and how they seek to bring clarity to the Act’s ambiguities.

    Career Development: A Step Forward

    One of the key areas addressed in the proposed rules is the definition of “career development.” Under the Act, employers are required to announce job opportunities, but this obligation does not extend to “career developments.” The Act defines career development as changes to an employee’s terms of compensation, benefits, full or part-time status, duties, or access to further advancement to update the employee’s job title or compensation. The proposed rules clarify that these changes should be related to the employee’s existing job and should not be within a position with a current or anticipated vacancy. This clarification ensures that employees are informed about potential advancements within their current roles.

    Career Progression: Setting The Right Path

    Career progressions are exempted from the definition of “job opportunity” and are described as regular or automatic movements from one position to another based on time or objective metrics. The proposed rules require employers to disclose and make available to all “eligible employees” the requirements for career progression and the terms of compensation, benefits, and other details of the new position. “Eligible employees” are those who, upon meeting the notice’s requirements, would move from their position to the other as a “career progression.” This ensures employees are informed about their potential advancement paths, fostering transparency and equality.

    Application Deadlines: Navigating The Gray Areas

    The Act mandates that job postings include an application deadline, which led to confusion surrounding evergreen job postings and extensions of application deadlines. The proposed rules provide two exceptions to the deadline requirement. If an employer accepts applications on an ongoing basis, the application must state this, and a deadline does not need to be included. In addition, an application deadline may be extended, provided the original deadline was made in good faith, and the posting is updated promptly. These exceptions offer practical solutions and flexibility to employers while ensuring transparency and fairness in the hiring process.

    AINT Hires: Balancing Flexibility And Transparency

    In the proposed rules, Acting, Interim, or Temporary (AINT) hires are considered when no immediate job opportunity posting is required for up to nine months. This applies when the hiring is not expected to be permanent. In such cases, a job opportunity posting must be made in time for employees to apply for the permanent position if the AINT hire becomes permanent. The proposed rules extended the duration of an AINT role from six to nine months, offering a balanced approach that allows employers to respond to immediate needs while ensuring employee transparency.

    Post-Selection Notice To Employees: Defining Regular Work Relationships

    The Act stipulated that employers must distribute post-selection notices to employees with whom the selected candidate will regularly work. The proposed rules clarify this by defining “work with regularly” as employees who either collaborate or communicate about their work at least monthly or have a reporting relationship. Employers are encouraged to provide notices to a broader range of employees or multiple selections at once as long as they do so within 30 days after any selection. These modifications simplify the process, making it more manageable for employers while ensuring that the right employees receive the necessary information.

    Geographic Boundaries

    The proposed rules outline a pragmatic approach by exempting employees outside of Colorado from notice requirements related to pre-selection, post-selection, and career progression. This adjustment streamlines the process for businesses with a multi-state presence, offering a more efficient way to manage compliance efforts and ensuring the rules have the desired impact where they are most relevant.

    The Importance Of Outsourcing

    As a small business owner in Colorado, you face the challenge of adapting to the new Equal Pay Transparency rules while maintaining growth and competitiveness. However, outsourcing these efforts to a professional employer organization (PEO) like GMS might be the solution you’re looking for. PEOs specialize in HR management, compliance, and employment regulations, offering expertise to ensure businesses comply with these new rules.

    By partnering with GMS, small businesses can access a range of HR services, from job posting compliance to transparent compensation and career development strategies. This partnership not only facilitates compliance but also frees up business owners to focus on growing their ventures. In a changing regulatory environment, the assistance of a PEO has become a vital asset for small businesses seeking to uphold the principles of equal pay transparency while pursuing their business growth objectives. Contact our HR experts today to learn more.