As 2024 comes to a close and we get ready to roll the calendar over into a new year, MBS is here to help you prepare for upcoming payroll and HR changes. These updates include changes at both the federal and state (Minnesota) levels, along with a few miscellaneous items to address with your employees. All updates take effect on January 1st, 2025.
Upcoming Federal Changes
Our first two points highlight changes that were initially planned but are no longer happening. The third point is still up in the air.
1. Salary Threshold Level
The Department of Labor had proposed changes to the exempt salary threshold which would have increased the salary level requirements in two stages – one in July 2024 and one in January 2025. However, the salary exemption level will not increase now, as a Texas court decision on November 15, 2024, struck down the proposed changes to the Fair Labor Standards Act (FLSA) overtime rules nationwide. (We updated our earlier blog post to reflect these changes.)
This decision has left many organizations grappling with compliance issues and the potential need to reverse recent changes. If your organization was preparing for payroll adjustments, it’s important to plan your response accordingly.
2. Ownership Reporting Requirements (See Update Below)
A federal court in Texas halted the implementation of the Corporate Transparency Act’s (CTA) beneficial ownership information (BOI) reporting requirements. The court found the CTA likely unconstitutional and issued a preliminary injunction preventing the government from enforcing the law and its BOI reporting requirements nationwide. (We updated our earlier blog post to reflect these changes.)
Update: As of March 26, 2025, the Financial Crimes Enforcement Network (FinCEN) has come up with a final ruling that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act. More information can be found here.
Please reach out if you have any further questions.
3. IRS Mileage Reimbursement Rate
The IRS standard mileage rate for self-employed and business use has increased from $0.67/mile from 2024 to $0.70/mile for 2025. Mileage rates for charities, medical and military moving remain unchanged from 2024.
Action Item: If you reimburse employee mileage, update the mileage rate in your bookkeeping system for 2025.
Upcoming Minnesota Changes
1. Minimum Wage Increases
Minnesota’s minimum wage will increase to $11.13/hr, which applies to all employers regardless of size or age of employees. Starting January 1, 2025, Minnesota will eliminate the two differently hourly minimum wages – one for large employers and one for small employers. The only exception is for employees under 20 years of age, who may be paid $9.08/hr during a 90-day introductory training period. For tipped industries, employers must ensure that employees receive at least the $11.13/hr minimum wage.
Higher minimum wages apply in Saint Paul and Minneapolis. If you have employees in these cities, make sure you are aware of the applicable rates and remain compliant.
Action Item: Update pay rates to comply with the minimum wage requirements by January 1, 2025.
2. Pay and Benefits in Job Postings
Part of the Omnibus Labor and Industry policy bill, signed into law by Minnesota Governor Walz on May 17, 2024, requires employers with 30 or more employees in the state to include a pay range and a general description of benefits and other compensation in all job postings. Job postings are broadly defined as anything that outlines applicant qualifications and is intended to recruit job applicants for a specific available position.
Pay ranges must include a minimum and maximum annual salary or hourly rate, and must be provided in good faith, meaning they should be a reasonable estimation of what the position is expected to pay. If an employer intends to offer a specific rate or salary for a position, that exact figure should be listed instead of a range.
Action Item: Amend job postings to include the required information by January 1, 2025.
3. Paid Leave Law
Minnesota Paid Leave provides job protections and partial wage replacement, administered by the state, to individuals who take leave for a qualifying condition, such as bonding with a new child or receiving medical care for themselves or their loved ones. The Paid Leave program will be funded through employer and employee contributions.
The employer reporting requirement began on October 31, 2024. If all of your employees are covered by Unemployment Insurance (UI), no further action is needed – your UI account has been converted into a joint UI & Paid Leave Account. However, if your business has any owners who are not subject to Minnesota UI, you will need to begin to manually report them for Paid Leave purposes on a quarterly basis.
The program becomes effective January 1, 2026, when employers will need to start withholding from employee paychecks. The first payment is due in April of 2026.
We put together this blog post with everything you need to know to stay on track with these updates.
Action Item: Ensure ALL employees have wages reported quarterly starting October 31, 2024.
Year-End Reminders for Employees
1. Contact Info
Ensure your employees’ contact information, particularly their mailing address, is up to date, so that W-2s get to the right place.
2. Flex Account Balances
Remind employees with flex accounts to spend their dollars before the end of the year.
3. Vacation/PTO Balances
Double check Vacation/PTO balances, and if you have a “use it or lose it” policy, remind employees to schedule their time off before the end of the year.
We know this time of year can be both stressful as you wrap up the year and exciting as you look ahead (and, hopefully, find time to enjoy some eggnog or fruitcake)! For the clients that we’ve had the pleasure of working with this past year, we thank you for the opportunity to serve you and wish you a very Happy 2025! If we haven’t had the privilege of working with you yet, reach out to us! We are accepting new clients for 2025 and would love the opportunity to help improve your numbers or your people!