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Birmingham Business Journal Quotes Balch Partner Doug Kauffman on Outstanding Questions Employers Have About Alabama House Bill 217

Doug Kauffman, partner in the firm’s Birmingham office and member of the Labor and Employment Practice, interviewed with Birmingham Business Journal (BBJ) about Alabama House Bill 217, a new state law signed by Governor Kay Ivey in June, 2023. Doug discussed how Alabama employers are seeking clarity about the new law.  

In the article published July 7, 2023, Doug discussed how companies across Alabama are planning to comply with House Bill 217, which will take effect January 1, 2024. The new law provides that the compensation paid to full time, hourly employees for working more than 40 hours in a week will be excluded from taxable gross income.  

He noted that while the new law provides a process employers must take to be in compliance, there are parts of the law that remain vague and employers are seeking clarity as they make plans for implementation. 

One example of an area needing clarity is how “hourly paid wage employees” are defined. Doug told the Birmingham Business Journal it is unclear under the new law whether salaried employees who are still eligible for overtime pay will be exempt from income taxes on overtime pay. 

Doug also noted that employers are seeking clarity on the new law’s definition of “full-time”, “compensation”, “week” and “work performed” to ensure proper compliance. 

Doug emphasized the importance for employers to have accounting systems capable of accurately recording payments for working beyond 40 hours in a specific week. This could be different than what the company may consider overtime, such as working on weekends without exceeding 40 hours in total, and scenarios like working 35 hours and then using a paid vacation day.

“I don’t think they’re going to just be able to take anything we call overtime and then put it in this exemption,” Birmingham Business Journal quoted Doug as saying. 

Companies must also prepare for additional reporting requirements, Doug explained. 

“There are some reporting requirements for employers to submit to the Alabama Department of revenue providing what that exemption would be for 2023 if it were applicable,” along with monthly or quarterly reporting requirements starting in 2024, Doug was quoted as saying. 

Doug helps employers manage their most valuable assets —their employees. For more than 20 years, he has counseled large and small employers, helping them stay up to date on the law, regulations, and best practices with respect to employment compliance. When issues arise in the workplace, Doug provides real-time solutions. He also handles complaints or audits by various government agencies, such as the EEOC, the Department of Labor, and the Immigration and Customs Enforcement, and he litigates all employment issues in court. Well respected on both sides of the table, Doug is frequently invited to speak at seminars sponsored by government agencies.