New Year, New Changes: 2024
As we step into the new year, 2024 brings an abundant amount of changes to payroll regulations and policies that employers need to be well-versed in. From minimum wage adjustments to changes in contribution limits for retirement plans, we aim to provide a comprehensive overview of these updates, illuminating the implications for both employers and employees.
Minimum Wage Increase in Colorado
The minimum wage in Colorado has taken a leap, reaching $14.42. This upward adjustment reflects a commitment to ensuring fair compensation for workers in alignment with the rising cost of living. However, it’s important for employers to assess the impact of this increase on their overall payroll expenses. Consider conducting a thorough analysis of your workforce and budget to understand how this change may affect your bottom line.
Additionally, tipped minimum wage has seen an increase to $11.40. Employers in industries where tipping is customary, such as restaurants, should revisit their payroll structures to ensure compliance with the new rate while maintaining fair compensation for tipped employees.
Unemployment Wage Base Expansion
The unemployment wage base has seen a notable increase, reaching $23,800. This adjustment has implications for both employers and employees. Employers should be aware of the potential rise in unemployment insurance costs. It’s advisable to review your budget and make necessary adjustments to accommodate this change. Additionally, communicate these updates transparently to your workforce, ensuring they are informed about potential adjustments to their take-home pay.
With these two changes alone, payroll expenses have already increased exponentially. Not only have wages increased, but now the premiums paid based off those wages are being calculated at an increased rate. Allow me to provide an example to demonstrate these increased calculations.
For the sake of argument, let’s say a full-time employee was paid at the minimum wage. By the year’s end, this employee will have grossed $1,601.60 more in 2024 than in 2023. Additionally, as an employer, you will have paid an additional $56.1 in SUTA premiums and $145.75 in social security and Medicare in comparison of the two years. This amounts to a combined $1,803.45. Now, if you have multiple employees, you can imagine the increase in payroll expenses.
401K Contribution Limit Upward Adjustment
The 401K cap limit has been raised to $23,000 (previously $22,500), allowing employees to save more for their retirement. For those aged 50 and above, the contribution limit has increased to $30,500. Employers should encourage their workforce to take advantage of these increased limits, emphasizing the importance of long-term financial planning. Offering educational sessions on the benefits of 401K contributions and the impact on future financial security can enhance employee engagement and satisfaction.
State-Sponsored Family and Medical Leave Program
The initiation of a state-sponsored family and medical leave program marks a significant milestone. Now that employees can apply for benefits, employers must familiarize themselves with the application process and support their employees in accessing these benefits. Consider revisiting your company’s leave policies to align them with the state-sponsored program, ensuring a seamless integration that promotes a healthy work-life balance. It would also be recommended to visit the Colorado state FAMLI site to familiarize yourself with the portal and/or set up an employer account if you already haven’t done so.
It’s important to communicate the details of the family and medical leave program to employees, highlighting the support available to them during challenging times. Employers may also want to reassess their contingency plans to manage workforce disruptions that could arise from employees taking advantage of this program.
As we embark on the payroll journey of 2024, staying informed about these changes is paramount. Employers who proactively adapt to these shifts in minimum wage, unemployment wage base, retirement contributions, and family and medical leave programs will not only ensure compliance but also foster a positive workplace environment. By embracing these changes, employers can demonstrate their commitment to the well-being of their workforce, contributing to a more resilient and thriving workplace in the years to come.
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