Imagine waking up to a compliance notice from the labor department in another state, because you...
OB3, OBBB… however you say it, the One Big Beautiful Bill Act brings some meaningful changes to payroll reporting. As always, our goal at Candoor is to stay ahead of those changes so you don’t have to, and to make sure your reporting is accurate, compliant, and easy to understand.
Below is a quick, practical overview of how our software platform, isolved, is already supporting these updates and what you’ll see for your 2025 reporting.
What’s Been Delivered for 2025
• isolved has automatically calculated an estimated FLSA overtime premium using each employee’s year-to-date pay data.
• This estimated amount appears on the employee’s W-2 in Box 14, labeled: “Est OT Premium”
• This is an estimate only, based on IRS guidance that allows employers to use a “reasonable method” when calculating qualifying amounts.
• Box 1 (taxable wages) is not affected. The Box 14 entry is for informational purposes only and does not change an employee’s taxable income.
• Two new reports are available to help you review and validate this information:
· Overtime and Tips – Employer
· Overtime and Tips – Employee
• These reports can be found in your Report Archive and are included with your final check date of 2025.
Important Notes
• These calculations are federal estimates only. They do not replace or impact any state-specific overtime requirements, such as California’s daily overtime rules after 8 hours.
• In rare situations where total hours on a paycheck were inflated for various reasons, the estimate may not be perfectly accurate. Employees can:
· Review the “Overtime and Tips – Employee” report, or
· Estimate their OT premium by taking the total overtime dollars from their final paystub of the year and dividing by 3. This provides a reasonable approximation.
• The report will only populate for employees who had overtime or tips during the year, so you may not see a page for every employee.
• If you’d like, you can print and share these reports with your employees. This information is provided to increase transparency and understanding. It is still an estimate and is not required to appear on the 2025 W-2. It will become a required item beginning with the 2026 W-2s.
We know changes like this can raise questions, especially when they touch employee tax documents. Our team is here to help you understand what you’re seeing and how to explain it clearly to your employees if needed. We’ll continue to monitor IRS guidance and keep you updated as anything evolves.
Thank you for trusting Candoor to help you stay compliant, informed, and prepared.
