ALABAMA – Guidance on Overtime Pay Exemptions
Effective January 1, 2024, overtime pay received by a full-time hourly employee for hours worked over 40 hours in a given week will be excluded from gross income and will be exempt from Alabama state income tax. The Alabama Department of Revenue has more information and guidance at Overtime Exemption – Alabama Department of Revenue.
Employers are required to report in two ways:
- A one-time report which includes the aggregate amount of overtime paid during 2023 along with the number of full-time hourly employees who received overtime pay. This report is due by January 31, 2024.
- Beginning in 2024, a monthly/quarterly report with the same data requirements beginning with the 2024 tax year tied to the employer’s reporting of withholding tax. This information is reported using Form A-6 (monthly) and Form A-1 (quarterly) withholding returns.
Alabama does note that due to the small number of employers using paper forms, they are not adjusting the A-6, A-1, or A-3 forms and are encouraging employers to file through the My Alabama Taxes portal.
CALIFORNIA – Legislature Passes Unemployment Benefits for Striking Workers, Bill to Move to Governor’s Desk
Senate Bill 799 was approved late last week and now moves to Governor Newsom’s desk for signature. If signed, the bill will grant access to unemployment benefits to striking workers after being on strike for two weeks. This could mean up to $450 per week for a maximum of 26 weeks for workers who are on strike. To be eligible for unemployment, striking workers would have to meet other requirements such as conducting a reasonable effort to search for work.
Currently, striking workers are ineligible for unemployment benefits in most states. California would join New Jersey and New York in allowing striking workers access to unemployment.
In New Jersey, striking workers have been eligible for UI benefits since 2018. However, a new law recently took effect on April 23, 2023 and applies to benefits retroactively to January 1, 2022. This law shortens the waiting period from 30 days to 14 days. According to the National Law Review, the new NJ law also does the following:
- Provides that the fourteen-day waiting period does not apply (1) if the labor dispute has not resulted in a “stoppage of work” or (2) when the employer engages the services of a replacement worker for a claimant’s position, whether on a permanent or temporary basis, or uses an existing worker reassigned permanently or temporarily to perform the duties of the claimant.
- “Stoppage of work” is defined under the law as a “substantial curtailment of work which is due to a labor dispute, during which less than 80% of the normal production of goods or services is met.” In that case, “a claim for [UI] benefits may not be disqualified” unless (1) “the employer documents to the satisfaction of the [New Jersey Department of Labor] that less than 80% of the normal production of goods or services has been met”; and (2) “none of the circumstances indicated as preventing disqualification … are applicable to the claim.”
- “Clarifies that there is no disqualification of a claim due to a labor dispute if an issue in the labor dispute is a failure or refusal of the employer to comply with an agreement or contract between the employer and the claimant, including a collective bargaining agreement with a union representing the claimant, or a failure or refusal to comply with a State or federal law pertaining to hours, wages, or other conditions of work, even if the failure or refusal is not the only issue in the labor dispute.”
- “Removes the penalty of up to $750 per week against employers who state that a replacement worker is not ‘permanent’ but fail to rehire the replaced worker” when the dispute ends.
- Finally, it allows the payment of UI benefits when employees have been locked out by their employer, “even if there was not a strike immediately preceding the lockout.”
In New York, workers involved in a labor dispute may be entitled to collect unemployment benefits after serving a 14-day waiting period. Until 2020, employees had to serve a 7-week suspension of benefits and serve a 1 week waiting period in order to collect unemployment. Under existing law, those workers who are locked out or permanently replaced need only wait the standard one-week waiting period for all unemployment claims before they become eligible for unemployment benefits. If a striking worker applies for unemployment benefits and the Department of Labor determines there is a lockout or if permanent replacement workers are hired during the 14-day suspension period, that employee’s claim will be activated early and will only be subjected to the one-week waiting period.
COLORADO – Gross Wage Definition for CO FAMLI Plans
The Colorado Family and Medical Leave Insurance (FAMLI) division received feedback that the original definition of wages for the FAMLI plan was too complicated, so they have amended the definition of wages to mean “gross wages” and will include amounts typical with employee compensation.
Gross wages will include the following pre-tax amounts:
- Salary or hourly wage
- Overtime
- Tips
- Bonuses
- Commissions
- Piece rate
- Employer-provided paid leave (PTO, sick, vacation, etc.)
- Disability benefits paid by the employer and not by a third-party
- Parental leave paid by the employer and not by a third-party
- The value of lodging or meals used as a credit toward the minimum wage
Gross wages will not include:
- Severance payments
- Employer contributions to, or payouts from, a deferred compensation plan
- Profit-sharing
- Pensions or retirement plan payments
- Expense reimbursements (mileage, travel, moving, per diems, etc.)
- Non-monetary payments (except lodging or meals to the extent they’re used as a credit toward the minimum wage)
For future reference, the new definition of wages can be found on the CO FAMLI Employer’s page under Important FAMLI Matters. To review the complete set of newly adopted rule amendments please refer to the CO FAMLI Rules page.
