Legislation + Regulation

Updates On Overtime & Corporate Transparency Regulations

Updates On Overtime & Corporate Transparency Regulations

By Michael Weems, VP of Public Policy, American Lighting Association

The Department of Labor:

The Department of Labor (DOL) issued the long overdue rule on overtime pay, amending the Fair Labor Standards Act to provide protection to over 4 million American workers.

Overtime pay protections are automatic for hourly employees, ensuring those that put in more than 40 hours a week get paid 1.5 times their regular pay for the extra hours they work. Salaried employees receive overtime only if they earn below a certain salary ($684 per week). Employees above that level are considered “exempt” from overtime pay protection and are typically classified as executive, administrative, or professional employees.

The new final rule will phase in the new overtime salary thresholds in two steps, first on July 1, 2024, and then on Jan. 1, 2025. After that, overtime salary thresholds will be automatically updated every three years.

Effective on July 1, 2024, the overtime salary threshold will be $844 per week (the equivalent of $43,888 per year for a full-time, full-year employee) and effective on Jan. 1, 2025, the overtime salary threshold will be raised to $1,128 per week (the equivalent of $58,656 per year for a full-time, full-year employee). The final rule is expected to cost $1.5 billion in the first full year of 2025 rate.

This increases the current overtime salary threshold by more than 60%. For reference, the current overtime salary threshold is $684 per week (the equivalent of $35,568 per year for a full-time, full-year employee).

Business groups are expected to sue to block the rule from going into effect, warning the outcomes of the rule will be highly disruptive to the economy and employers’ overhead costs. Additionally, the automatic updates are expected to outpace the rate of inflation. ALA submitted comments in opposition to DOL’s proposal.

Department of Treasury:

Here is an update on the implementation of the Corporate Transparency Act (CTA) by the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

Last year, ALA informed members of a new federal requirement for businesses with fewer than 20 employees to disclose owners’ information to FinCEN. CTA became law under the rationale of needing to increase corporate transparency. Over 30 million businesses are expected to be impacted by the rule. Failure to comply can result in $10,000 in fines and up to two years in prison.

The rule was slated to take effect Jan. 1, 2024, but several significant developments have occurred since ALA last reported on the matter:

  • December 2023, the United States House of Representatives, in a near unanimous vote, passes the Protect Small Business and Prevent Illicit Financial Activity Act, a bill to delay several of the deadlines in the CTA.
  • At the same time, 80 Senators and Representatives send a letter to FinCEN urging an overall one-year delay for all reporting requirements.
  • Also in December, the National Small Business Association (NSBA) launched a legal challenge against the CTA and Treasury.
  • Jan. 3, 2024, Treasury opens the beneficial ownership portal, CTA officially in effect.
  • Mar. 2, 2024, A Federal District Court judge rules the CTA unconstitutional, however FinCEN says they will still enforce the CTA on all non-NSBA members. Treasury appeals ruling to the Eleventh Circuit.
  • March 2024, Additional legal cases filed nationwide.
  • April 30, 2024, House Committee on Small Business will hold a full committee hearing titled “Under the Microscope: Examining FinCEN’s Implementation of the Corporate Transparency Act.”
  • April/May 2024, Congress is on the verge of introducing a CTA repeal bill.

Until the legal cases are resolved or Congress takes action, ALA-member companies that meet the necessary qualifications set forth in CTA should comply. The consequences for not doing so are not worth the risk.

For additional information: 

FinCEN’s Comprehensive Q&A

FinCEN’s Small Business Compliance Guide

Image: American Lighting Association

 

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