Employers in Alabama and Maryland face significant changes to wage and hour requirements starting October 1, 2024. California may also soon see a higher minimum wage for healthcare workers, depending on state revenue. Here’s what employers in these states need to know about the upcoming changes.
For additional information regarding wage and hour laws and to find out how this could impact your business, please contact our Managing Partner, Richard Liu, at richard.liu@consultils.com.
Alabama: Overtime Pay Exemption Expanded
Alabama has amended its Overtime Exemption Act to align with the Fair Labor Standards Act (FLSA). Starting October 1, 2024, overtime pay for full-time hourly wage-paid employees, as defined by the FLSA, will be exempt from Alabama state income tax. This exemption is applicable to all employers who are required to withhold Alabama state income tax from employee wages.
The key details regarding the Alabama overtime pay exemption are as follows:
Applicability Period: The overtime pay exemption applies to wages received between October 1, 2024, and June 30, 2025.
Eligibility: Full-time hourly employees working over 40 hours in a week will qualify for the exemption, regardless of the overtime rate or how the hours are calculated.
Employers Governed by the National Railway Labor Act: Employers covered under the National Railway Labor Act will apply the exemption based on the terms of relevant collective bargaining agreements.
Reporting Requirements: Employers must report the total aggregate amount of overtime paid and the number of employees who received it. This reporting must be done monthly or quarterly, beginning with the 2024 tax year.
Maryland: Wage Range Transparency Requirements
Maryland's new Wage Range Transparency Act will also take effect on October 1, 2024. The law amends Maryland's Equal Pay for Equal Work law and requires employers to disclose specific wage information in all job postings. This requirement aims to strengthen Maryland's wage discrimination laws and promote pay equity.
Key requirements for employers include:
Disclosing Wage Information: Employers must include the minimum and maximum wage range, a general description of benefits, and other compensation details in all public and internal job advertisements.
Scope: The new requirements apply to all positions that will be physically performed, at least in part, in Maryland. This means the law is applicable even if the employer is not physically located in Maryland, as long as the position involves work within the state.
Non-Retaliation: Employers are prohibited from retaliating against employees who do not provide their wage history or exercise their rights under the law.
Employers should ensure their recruitment processes are updated to comply with these new requirements and establish procedures for responding to applicant requests regarding wage information.
California: Minimum Wage Increase for Healthcare Workers
California’s healthcare minimum wage is set to increase as early as October 15, 2024, based on state revenue performance. The details are as follows:
Facilities with 10,000+ Full-Time Employees: Healthcare workers must be paid at least $23 per hour starting October 15, 2024. The minimum wage will increase by $1 per hour annually, reaching $25 per hour by July 1, 2026. Starting January 1, 2028, wages will increase annually at the lesser of 3.5% or the Consumer Price Index (CPI).
Hospitals with High Governmental Payor Mix & Rural Independent Healthcare Facilities: Covered employees will receive at least $18 per hour beginning October 15, 2024, with the wage rising 3.5% annually until reaching $25 per hour by July 1, 2033. From January 1, 2035, wages will continue to increase annually based on the lesser of 3.5% or the CPI.
Clinics: Starting October 15, 2024, covered employees must be paid at least $21 per hour, increasing to $22 per hour on July 1, 2026, and reaching $25 per hour by July 1, 2027. From January 1, 2029, annual increases will be based on the lesser of 3.5% or the CPI.
Other Healthcare Facilities: Starting October 15, 2024, covered employees must be paid at least $21 per hour, rising to $23 per hour by July 1, 2026, and reaching $25 per hour by July 1, 2028. From January 1, 2030, annual increases will be based on the lesser of 3.5% or the CPI.
The effective date of the increase depends on whether the state's revenue between July 1, 2024, and September 30, 2024, exceeds expectations by at least 3%. If it falls short, the wage increase will be postponed until January 1, 2025, or 15 days after the California Department of Health Care Services reports that it has started retrieving hospital quality assurance fee data.
Healthcare employers in California should monitor state announcements regarding revenue targets to determine when the new wage rates will take effect.
Next Steps for Employers
Employers in Alabama, Maryland, and California need to prepare for these upcoming changes. Here are some steps to consider:
Review Payroll Policies: Employers in Alabama should ensure their payroll systems are ready to apply the state income tax exemption for eligible overtime pay.
Update Recruitment Processes: Employers in Maryland must ensure that wage range information is included in all job postings and be ready to provide this information to applicants upon request.
Prepare for Minimum Wage Changes: Healthcare employers in California should be ready to adjust their payroll practices based on state revenue outcomes.
Conclusion
The new wage and hour regulations in Alabama, Maryland, and California underscore the importance of fair compensation practices and transparency in the workplace. By taking a proactive approach to implementing these changes and consulting with legal experts, employers can ensure they remain compliant while fostering a fair and supportive work environment for all employees.
For additional information regarding wage and hour laws and to find out how this could impact your business, please contact our Managing Partner, Richard Liu, at richard.liu@consultils.com.
Disclaimer: The materials provided on this website are for general informational purposes only and do not, and are not intended to, constitute legal advice. You should not act or refrain from acting based on any information provided here. Please consult with your own legal counsel regarding your specific situation and legal questions.
Richard Liu, Esq. is the Managing Counsel of ILS. He serves clients as a management-side defense lawyer specializing in employment and business litigation. Richard is also an expert on litigation prevention and compliance. He regularly advises Fortune 500 companies and startups on employment, labor, and commercial matters.
Email: richard.liu@consultils.com | Phone: 626-344-8949
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