Aspen Highlights & Updates
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HR and Legal Alerts
One Big Beautiful Bill – The One Big Beautiful Bill Act was signed into law on July 4, 2025. The Act includes several significant changes that are relevant to employers regarding payroll, employment tax, and employee benefits. Several key provisions are effective retroactively as of January 1, 2025. In August, the IRS announced that there would be no changes to tax withholding for 2025 and no changes to applicable IRS forms for 2025, including Form W-2, Form 1099, and Form 941. Additionally, the IRS announcement instructs employers to continue using their current procedures for withholding and reporting for Tax Year 2025. This is an evolving situation, and Aspen will continue to monitor and keep you posted.
No Tax on Overtime – With the passage of the One Big Beautiful Bill Act, employees are now eligible to deduct qualified overtime wages from taxable income when filing their 2025 taxes, and this provision will remain in place through 2028. To take advantage of this, employees will need to know the amount of qualified overtime wages earned. It is not required to be reported on the W-2s for 2025, but it will likely be required in future years.
Workers below certain income thresholds can deduct up to $12,500 in qualified overtime compensation ($25,000 for joint filers) from their federal taxable income. This deduction is taken when filing annual tax returns. The deduction phases out for those earning $150,000 or more, meaning higher-income earners may receive a reduced benefit or no benefit at all.
Qualified overtime refers specifically to overtime required under the Fair Labor Standards Act (FLSA)—typically, hours worked over 40 in a workweek. Overtime that is not required by FLSA, such as daily overtime (e.g., over 8 hours/day in certain states), does not qualify for this tax deduction.
Aspen is currently working through how to handle this retroactively for 2025 for clients who use our Time & Attendance (T&A) system. We will be in touch shortly with additional guidance. It is important to note that employees will continue to pay employment taxes on their regular payroll, but may take a deduction up to a certain amount of wages during the tax season.
No Tax on Tips – The Act includes a federal income tax deduction for qualified tips, effective for tax years 2025 through 2028. “Qualified tips” means cash tips received by an employee or an independent contractor in an occupation that customarily and regularly receives tips on or before December 31, 2024.
On September 22, 2025, the Treasury Department released a preliminary list of occupations that customarily and regularly receive tips. The preliminary list comprised 68 occupations across eight industries. The proposed regulation retains that list. A full list can be found here.
The Treasury Department acknowledged that the list includes occupations (such as dishwashers and cooks) that the U.S. Department of Labor (DOL) and courts have interpreted as not customarily and regularly receiving tips for purposes of the tip provisions of the Fair Labor Standards Act (FLSA).
Individuals must earn $150,000 or less in 2025 to be eligible; for couples, the combined income limit is $300,000 (this threshold will be adjusted for inflation in future years). The maximum deduction for tip income is $25,000 per year.
EEOC to Close Disparate Impact Claims – The U.S. Equal Employment Opportunity Commission will close almost all pending charges based solely on allegations of disparate impact discrimination by September 30, 2025, according to an internal memorandum. The agency is expected to issue right-to-sue letters to charging parties whose charges will be closed, allowing them to proceed on their own in federal court.
Disparate impact is a theory of liability under civil rights laws in which a facially neutral practice has a disproportionately adverse effect on a protected class of individuals. Unlike disparate treatment liability, which requires proof of intentional discrimination, disparate impact liability arises from the use of a neutral practice and requires no showing of intent to discriminate.
It is important to note that, while it seems clear that the EEOC will no longer pursue investigations or bring litigation based on disparate impact theory, employers are cautioned that disparate impact liability remains a viable theory of discrimination under Title VII.
E-Verify Is Back – On October 9, 2025, E-Verify resumed operations. Employers had until October 14, 2025, to create an E-Verify case for each employee hired while E‑Verify was not available. Aspen ensured completion of the E-Verify case for each client by the deadline.
Florida’s Open Carry Law – Due to new case law, Florida’s attorney general instructed prosecutors and law enforcement not to enforce the ban, making Open Carry the new law of the state. Therefore, adults who are lawfully permitted to possess a firearm may now carry it openly in most public places, subject to certain limitations. Private businesses may prohibit the open carry of firearms on their premises, and refusals to leave can result in trespass charges. Therefore, private business owners maintain the right to ban firearms (open or concealed) on their property, including in company-owned or leased vehicles and equipment.
However, Florida’s “Bring Your Guns to Work” statute imposes some exceptions to this right. Principally, employers may not prohibit employees and invitees from possessing legally owned firearms that are locked inside or locked to a private vehicle in a parking lot when the employee or invitee is lawfully in the area.
Massachusetts New Pay Transparency Requirements – Effective October 29, 2025, Massachusetts employers with 25 or more employees in the Commonwealth will be required to: (1) include pay range for a position on all job postings; (2) disclose pay range for a position to existing employees who receive a promotion or transfers to a new positions; (3) provide pay range information for a particular position to an employee who holds the position or to an applicant upon request.
The law defines “pay range” as the annual salary range or hourly wage range that the employer reasonably and in good faith expects to pay for the position at the time of posting or request. Unlike many other states with similar laws, the Massachusetts law will not require disclosure of bonus, commission, benefits, or equity grant information.
During the first year the law is enforceable, employers can cure any job posting violations within 48 hours to avoid penalties.
Michigan Paid Sick Leave for Small Businesses – Effective October 1, 2025, businesses with 10 or fewer employees must start complying with the Earned Sick Time Act (ESTA) requirements. Notably, small businesses are only required to allow employees to use up to 40 hours of paid sick leave in a given year. Small Employers can cap carryover to 40 hours (72 hours for large employers).
When ESTA allows an employer to request supporting documentation for ESTA-covered time usage, the employer can demand that the documents be provided within 15 days of the employer’s request.
Employers that provide 72 hours (40 hours for small businesses) of earned sick time for immediate use at the beginning of the benefit year do not have to: (1) allow carry over of unused time; (2) calculate and track employees accrual of paid earned sick time; or (3) pay out unused accrued paid earned sick time at the end of the year in which it was accrued. Aspen will update your iSolved accruals to ensure that sick pay is tracked accurately for each employee.
New York City Approves Pay Data Reporting – The New York City Council approved a bill that will require employers with 200 or more employees in New York City to report pay and demographic data annually. The bill is currently awaiting the Mayor’s signature.
Specifically, employers would be required to submit detailed pay and demographic data that corresponds with the categories required by the EEOC in the EEO-1 Component 2 reporting requirements for 2017 and 2018 reporting years, which requires compensation reporting by race/ethnicity and gender.
Within one year of the law’s effective date, the Mayor must designate an agency to conduct a pay equity study. Once an agency is selected, that agency will have one year to develop a standardized form for employers to submit pay reports. Aspen will monitor the situation and notify you if/when this bill takes effect.
Have questions? Don’t hesitate to contact our team.