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- The new invoice is wider than the FLSA and, when it is adopted, applies to all companies.
- The legislation proposes a reporting obligation for all Georgia companies.
- If the law on Georgia is adopted, there may be a greater incentive for employees to raise overtime claims as part of the FLSA.
- If the legislation becomes the law, there may be a tax incentive to switch some employees to an hourly rate.
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A legislator in Georgia in the legislator of the state would rule out overtime taxes from the state of Georgia from 2026 if adopted.
House Bill 375 (HB 375), introduced on February 11, 2025, would exclude from the tax statute, which was paid by a “full-time employee with an hourly wage as compensation for work over 40 hours a week, and each amount paid in the amount of the Federal Marks of the Body Protection Act.” (FLSA). There were promise of similar laws at the federal level, but no similar exclusion from the federal government.
The proposal has an impact on the Georgia companies that need to be taken into account:
1. HB 375 is wider than the FLSA and applies to all companies.
The invoice would affect a larger number of employers and employees than the FLSA. Not all employers are covered by the FLSA and not all employees who receive an hourly wage are covered by the FLSA. However, all employers and hourly wage workers would be covered by HB 375.
For example, the FLSA does not apply to small companies with an annual gross sales volume of less than 500,000 US dollars, the employees of which are not involved in the intergovernmental trade. HB 375 would apply to all companies. Similarly, the FLSA does not apply to freed employees. Some liberated employees can still be paid for hours, e.g. B. outside and within sales employees under 29 USC § 207 (I), employees who are covered by the liberation of the seasonal or leisure delegation facility or lawyers, doctors and other “experts” who do not have to earn a salary. HB 375 would reduce the taxes of a full -time employee if they received an hourly wage instead of a salary.
2. HB 375 proposes a report request for all Georgia companies.
In HB 375, employers must report all overtime monthly wage information to the US state of Georgia, Department of Revenue. The invoice indicates the employer to keep an overview and report:
- The total amount that was paid for more than 40 hours a week for work; And
- The total number of employees who have been paid for such compensation.
As part of the proposal, the Ministry of Finance can provide employers with additional information at their own discretion.
In the FLSA, muted employers must already pursue this information for non -freed workers. HB 375 would expand this requirement to all Georgia companies and add positive reporting. Since HB 375 would cover a larger number of employees, Georgia employer may not be able to rely on existing data or reports in order to meet their reporting requirements in accordance with HB 375.
3. If the proposal is adopted, there may be a greater incentive for employees to raise overtime claims as part of the FLSA.
The FLSA demands from muted employers to pay employees to pay the federal minimum wage and the time and a half times for the period of more than 40 hours in a week. There is no lack of FLSA lawsuits based on actual or perceived overtime injuries. Judgments and settlements that were paid due to alleged FLSA violations are subject to income tax.
When HB 375 is adopted, the employees may have a greater incentive to submit FLSA lawsuits based on overtime violations, since the inner value of these claims increases. If it is adopted, HB 375 could also encourage plaintiffs to try overtime more compensation than for regular payment claims during the comparison discussions to avoid state taxation.
For Georgia employers, it would be even more important to proactively ensure that they comply with the FLSA to avoid these complaints and ensure that they have an appropriate compensation when negotiating FLSA settlements.
4. If HB 375 is adopted, there may be a tax incentive to switch some employees to an hourly rate.
Under HB 375, employers can enable some employees to change an hour's salary basis in order to put more money into the pockets of their employees without increasing wages.
The employee and the employer would have to agree on an effective hourly rate that would not lead to the employer paying more than the annual salary, but is still high enough that the employee probably has more wages at home if the exclusion of HB 375.
This potential benefit could lead to considerable tax savings for almost every employee who works over time when they are properly used, even if they are freed from the FLSA. If HB 375 is adopted, Georgia companies should evaluate their wage structure on a creative opportunity to keep employees with a higher wage with taking away, even if there is no space in the budget for additional payment.
The newly introduced legislative template shows how important it is to implement good employment practices in accordance with the requirements of the FLSA. This means that employers are at a good time to check their employment practices and consult a lawyer to ensure compliance with compliance.
If you have any questions about the FLSA, HB 375 or other employment questions, please contact a Jackson Lewis lawyer.
