Everyone Benefits in Assisting CA Wildfire Victims, Small Businesses Resilient, Pay Transparency Laws

Hey everybody, it's Gene Marks, and welcome to this week's episode of the Paychex THRIVE Week in Review podcast. This is where review a few items of news that impact your small business and my business and talk a little bit about it, as well. 

Well, the lead story of this week are the wildfires in California. They've not only had a devastating impact on a lot of individual homes and properties, but also on a lot of small businesses, as well. And I wanted to remind you of something that was actually blogged about by Morgan Lewis, the international law firm, at Morgan lewis.com. They wanted to remind all of employers of tax-exempt benefits for helping employees that are going through a qualified, natural disaster. So, let me read this out to you. 

“The IRS rules allow employers to cover certain employee out-of-pocket expenses incurred as a result of a qualified disaster, as well as to establish leave banks into which employees can deposit annual leave to be paid to other employees if they have or they have. Family members have experienced severe hardship on account of a disaster that requires the employee to be absent from work. Additionally, employers may be able to utilize tax exempt organizations to provide disaster relief to their employees. This is under Internal Revenue Code Section 139.”

I just want to be clear about this. If you have a qualified disaster – and the wildfires in California certainly qualify as one – you as an employer can make certain payments to your employees that benefits them to reimburse them for certain reasonable expenses; things like health care, course materials, food and housing. The employee themselves do not get taxed when you make those payments to them and you as the employer, you get a tax deduction for doing that. 

So, just be aware if you want to make any extra additional payments to your employees to help them out. That is a nontaxable event. Also, the IRS allows employees to basically deposit their vacation time and give it to other employees, and those employees, even though they're being compensated with other vacation time, they wouldn't be taxed on that either. 

So, I realized there was a lot of hardships, a lot of things that both employees, business owners, individuals are going through right now in Los Angeles, and our thoughts are with them. But please don't forget that there is an IRS, a tax benefit available for employers that want to help out their employees. And, again, this is morganlewis.com on their website and it provides more information about that. 

Our next story has to do with jobs and the monthly Small Business Employment Watch, which is issued by, of course, Paychex. Well, Paychex’s latest for December was released and there's interesting information that we want to share with you. 

Job growth in the U.S. for small businesses with fewer than 50 employees averaged modest employment growth throughout 2024, according to the Paychex Small Business Employment Watch. The National Jobs Index was relatively unchanged at the end of the year and has held its pace since the summer. However, at 2.96% in December, hourly earnings growth for U.S. small business workers remained below 3% for the fifth consecutive month.

So, what does John Gibson, the CEO Paychex, have to say about this? He says, “The pace of job growth among U.S. small business is downshifted slightly as 2024 progressed. Its small businesses remained resilient throughout the year.” Gibson also said that as we head into 2025, small-business owners continue to face some challenges, such as access to growth capital, rising health care costs, and the ability to hire qualified talent.

But, in spite of this, optimism and hiring intentions improved to close this year, both trends that will be worth watching as we begin 2025. 

So again, according to the Paychex Small Business Employment Watch, job growth was modest this year. Wage increases below 3% for the past five months. Even so, according to Paychex CEO John Gibson, small businesses do remain resilient. We will be watching as these developments occur in 2025. 

The final story that I have for you this week has to do with pay transparency, and this is an article that comes from Bizjournals.com about pay transparency. State and local governments are increasingly mandating that salaries and pay ranges are included in job listings, but employers are largely unprepared to make those decisions. Just 18% of employers surveyed by professional services firm Aon, PLC said they felt ready for these new pay transparency laws. 

The finding comes at a time when such laws currently or will be in effect in 14 states in 2025. If you're interested in the states that have paid transparency laws, they are Massachusetts and Maryland, the District of Columbia, California, New York, Washington state, Colorado, Connecticut, Maryland, Nevada, and Rhode Island. This year, Minnesota and Illinois are joining those states, so the numbers are up to 14. 

Pay transparency is very important, and whether or not your state has a law about it, you as an employer should very much be considering it. Remember, pay transparency means that when you advertise for job, you give the range of the salary that will be involved, so you're completely transparent about the compensation. This helps avoid any discrimination issues. 

The pay transparency came about few years ago mainly because of the fact that female workers have historically been paid less than their male counterparts. So, pay transparency laws are trying to avoid doing that by fully disclosing what the pay ranges are for specific jobs and job titles, so that there can be more equity and less discrimination.

Again, even if your business is not in one of those 14 states, being transparent with the pay that you're offering in your job listings strongly recommended that you do as a best practice.

My name is Gene Marks and you have been watching or listening to this week's episode of the Paychex THRIVE Week in Review podcast. If you would like any advice or tips for help in running your business, please feel free to sign up for our newsletter at paychex.com/thrive. 

Thanks for joining us this week. We look forward to coming back to you next week with a few more bits of news that will help you and your business. We will see you then. Take care.

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