December’s Compliance Brief: Stay Aligned Before 2025
News November 25, 2024
The HR world is busier than ever, and it’s tough to keep up with every change. Don’t worry—we’ve got you covered! Here’s a quick overview of the key updates you need to know to stay compliant this December.
FLSA Overtime Rule Halted: What You Need to Know
A dramatic increase in the number of workers eligible for overtime has been halted. On Friday, November 15, a federal judge overturned the Department of Labor’s 2024 overtime rule, resetting the salary threshold for overtime eligibility to $35,568. This decision retroactively cancels the July increase to $43,888 and blocks the planned jump to $58,656 in January 2025. The U.S. DOL may appeal the decision. More information on the now sidelined increases can be found on the DOL website.
Additional Key Points:
- The ruling also eliminates the “escalator” provision, which would have increased the threshold every three years.
- Employers are advised to consult legal counsel before reversing changes made under the now-invalid rule.
What Does This Mean For You?
Take a breath and don’t react until you have had a chance to think through your next steps. Don’t reverse course if you’ve already made changes to comply with the July 1st increase, or the planned January 1st increase. It’s best to check with your legal or HR advisors to ensure compliance across the board. We know this raises questions, so we’re planning a session soon to walk employees through what this means and how to adjust. Stay tuned for details—it’s coming soon!
IRS Announces 2025 401(k) Contribution Limits
- IRS announces an increase to the annual individual contribution limit for 401k plans to $23,500 for 2025. That mark is up $500 from 2024’s cap of $23,000 the same size increase as that put into place by the IRS between 2023 and 2024. The $23,500 cap also applies to 403(b) plans, governmental 457 plans and the Thrift Savings Plan.
- Th IRA limit remains unchanged at $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2025.
- Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.
Additional resource below: