Category: Management

On November 21, the Treasury Department and IRS issued guidance for workers eligible to claim deductions for tips and overtime under the One Big Beautiful Bill Act (OBBBA) for tax year 2025. Notice 2025-69 clarifies how employees can calculate deductions even if employers do not provide a separate accounting of cash tips or qualified overtime on Forms W-2 or 1099, which remain unchanged for 2025. The IRS is updating tax forms and instructions to assist employees in claiming these deductions.

Tips Deductions

Eligible tipped workers may deduct up to $25,000 per year, phased out for modified adjusted gross incomes above $150,000 ($300,000 for joint filers). Employees can rely on amounts reported in box 7 of Form W-2, on Form 4070 (tips reported to employers), or on Form 4137 (unreported tips). Self-employed individuals may use substantiated tip logs or third-party payment records, even if tips are included in a Form 1099-K without separate identification.

Overtime Deductions

Employees may deduct qualified overtime pay that exceeds their regular rate—typically the “half” portion of time-and-a-half pay required under the Fair Labor Standards Act (FLSA). Maximum deduction is $12,500 per individual ($25,000 for joint filers), with phase-out at the same income thresholds. Employees must meet FLSA eligibility; deductions apply to both itemizing and non-itemizing taxpayers.

IRS Penalty Relief and Voluntary Reporting

Notice 2025-62 provides relief for errors in filing or furnishing information returns or payee statements under the Internal Revenue Code (IRC 6721 and 6722). While reporting OBBBA tips or overtime is optional, businesses may voluntarily include amounts in box 14 of Form W-2, provide separate statements, or use secure portals.

Bottom Line for Employers

Voluntary reporting can streamline year-end payroll, reduce confusion, and help employees claim deductions correctly. By tracking FLSA status, keeping clear records of tips and overtime, and communicating proactively, employers can minimize errors and support workers as these new 2025 deductions roll out.

Closing out the year doesn’t have to be stressful. Use this checklist to keep payroll accurate, employees happy, and your business compliant.

Before the Final Payroll

1. Verify Employee & Contractor Information
Check that names, addresses, Social Security numbers (SSNs), and vendor Federal Employer Identification numbers (FEINs) are correct. Errors here can lead to penalties on W-2s and 1099s.

2. Review Wages, Benefits & Deductions
Look at year-to-date wages, bonuses, overtime, health insurance, retirement contributions, and other withholdings. Catch discrepancies early.

3. Review Disability Paid to Employees
Review any disability paid to employees throughout the year. The totals will need to be recorded on their W-2. This will need to be done before the first of the new year.

4. Reconcile Payroll & Tax Reports
Compare payroll reports with bank statements and quarterly filings to ensure everything adds up.

5. Handle Special Payments & Adjustments
Schedule final bonuses, reimbursements, and any other special pay runs.

During the Final Payroll

1. Process Your Last Payroll
Run your final payroll of the year, making sure all payments are correct.

2. Pay Out Accrued PTO
Follow your policy for unused paid time off.

3. Apply Any Final Adjustments
Include any remaining bonuses, special payments, or corrections.

After the Final Payroll

1. Prepare & Distribute Year-End Tax Forms

• W-2s: For employees, reporting wages and taxes withheld.
• 1099-NEC: For contractors. Distribute forms by IRS deadlines.
  

2. File With Tax Authorities

• W-3: Summarizes all W-2s for the SSA.
• 1096: Transmittal for 1099s to the IRS.
• 941 & 940: Quarterly payroll and unemployment tax filings.
• ACA: Be aware of your Affordable Care Act  (ACA) filing responsibilities.
  

3. Plan for the New Year
Update payroll policies, review benefit changes, and request new W-4s for employees whose circumstances may have changed.

Following this year-end payroll checklist ensures accuracy, compliance, and a smooth transition into the new year—so you can focus on running your business, not chasing paperwork.

---

Schedule a call to find out how Counter Point can protect your business and streamline your compliance processes.

Running a small business means every team member plays a critical role in driving growth. According to Gartner research, when employee goals align with both organizational priorities and individual needs, performance can increase by up to 22%. That’s not just an HR statistic, it’s a bottom-line opportunity for business owners.

Clear, aligned goals keep employees motivated, accountable, and focused on the work that matters most. When people see how their contributions connect to company success, they bring more energy and ownership to the table.

Here are five practical ways small business owners can make that alignment happen:

1. Share Company Goals in a Relatable Way

Employees don’t just need to know what your goals are, they need to understand why they matter. Keep it simple and connect the dots. For example, instead of saying “grow revenue by 10%,” explain that landing two new clients will cover overhead costs and create funds to reinvest in better equipment. This makes the goal real and relevant.

2. Clearly Define the Goal-Setting Process

In a small business, structure reduces confusion. Walk employees through how to set their own goals, tie them to team priorities, and see how they feed into the bigger picture. Even a straightforward checklist or shared document can provide the clarity they need to succeed.

3. Set Measurable and Attainable Goals

Your team will rise to the challenge, but only if the goals are realistic. Work with employees to define goals that stretch their abilities while still being achievable. A strong goal not only drives progress for the company but also supports the employee’s professional growth.

4. Show How Individual Goals Drive Business Success

Visibility builds motivation. Track progress together, celebrate wins, and point out how small victories add up to big results. For instance, completing a project ahead of schedule might free up resources to take on new business, something that directly strengthens the company’s bottom line.

5. Foster Ongoing Feedback and Communication

Goals shouldn’t gather dust. Regular check-ins help keep people on track and ensure priorities still make sense as things shift. Encourage employees to share what’s working and what feels unrealistic. That two-way communication builds trust and creates a sense of partnership.

---

When you connect your employees’ goals to the success of your business, you do more than drive performance; you create a culture of engagement, purpose, and accountability. And in a small business, that can make all the difference between simply surviving and truly growing.

Cybercriminals are increasingly zeroing in on HR departments, exploiting their trusted role within organizations to steal sensitive employee and company data. These attacks often arrive in the form of phishing emails disguised as legitimate HR communications, making them especially dangerous.

Instead of the usual suspicious-looking scams, these emails mimic everyday HR processes—vacation requests, W-4 updates, or performance reviews—subjects that employees are used to seeing. Because of this familiarity, research shows employees are more likely to interact with them, with nearly one in three users clicking on suspicious links.

One tactic gaining traction is “quishing,” or QR code phishing. In these cases, the email includes a QR code that, once scanned, directs the user to a fake website designed to steal login credentials or financial details. The blend of familiarity, urgency, and clever disguise makes HR impersonation phishing one of the most effective attack methods today.

KnowBe4, a leading cybersecurity awareness training company, recently analyzed attacks from 2025 and identified four major phishing trends HR and business leaders should watch:

Changes to Payroll and Benefits

Cybercriminals send emails claiming updates to an employee’s salary or benefits elections. These are often customized with the recipient’s name, company logo, and financial details to look legitimate. The goal: to trick employees into sharing sensitive information.

HR Policy Updates

Attackers exploit urgency by requesting employees to review and acknowledge fabricated policy changes. By adding tight deadlines and threatening consequences, they push recipients to act quickly without verifying the legitimacy of the request.

401k Updates

Financial security is top of mind for most employees, which makes 401k updates a prime target. These phishing emails often resemble automated alerts, complete with fake tracking numbers and system-generated templates, and may carry malicious attachments to bypass security filters.

Electronic Contracts and Financial Documentation

This approach involves fake contracts or business documents that appear to come from HR or legal departments. With forged signatures, disclaimers, and even the company’s name in the subject line, they closely resemble authentic automated emails.

As phishing tactics become more sophisticated, HR departments must stay vigilant to reduce cybersecurity risk. Employee education, regular phishing simulations, and clear reporting procedures are essential to building a culture of security awareness. By recognizing these deceptive trends, businesses can protect both their workforce and their sensitive data from falling into the wrong hands.

When hiring new employees, it’s important to stay on top of Form I-9 and E-Verify compliance requirements. As of January 2025, a new version of the Form I-9 is available, bringing some small but important changes. While these updates don’t affect what documents employees provide or how they complete the form, they do reflect updated legal terminology and privacy guidelines from the Department of Homeland Security.

What’s New with Form I-9?

All U.S. employers must complete a Form I-9 for every new hire, regardless of citizenship or immigration status. The newest version of the form (Edition January 20, 2025) includes:

• A wording change in Section 1: the box previously labeled “A noncitizen authorized to work” now reads “An alien authorized to work.”
• Updated descriptions for two List B identity documents to align with legal standards.
• Revised privacy notice language based on current DHS guidance.
  

Employers may use any of the following editions of the form:

• Edition January 20, 2025 (expires May 31, 2027) – recommended for immediate use
  Edition August 1, 2023 (expires May 31, 2027) – still valid
  Edition August 1, 2023 (expires July 31, 2026) – valid, but systems must be updated before that expiration date

Make sure your HR or onboarding systems reflect the correct expiration date if using the August 1, 2023 version.

E-Verify Language Update

If you use E-Verify to electronically confirm employee eligibility, there’s one key terminology update: The citizenship status selection has been changed from “A noncitizen authorized to work” to “An alien authorized to work.” Here’s how it affects you:

• If an employee selects “An alien authorized to work” on the new Form I-9, you’ll see that same language in E-Verify.
• If an older version of the form is used, and the employee selects the previous phrasing, you must still choose “An alien authorized to work” when creating an E-Verify case.
  

What Employers Should Do Now

To stay compliant, employers should begin using the newest version of Form I-9 or continue with a currently valid edition until its expiration. It’s also important to review internal systems and software to ensure they reflect the correct expiration date and updated terminology. Lastly, take time to train your hiring team on these language changes to prevent confusion and ensure a smooth onboarding process.

---

Schedule a call to find out how Counter Point can protect your business and simplify your compliance processes.

In today’s workplace, protecting employee data is just as important as managing it. With threats evolving constantly, organizations must take a proactive and layered approach to cybersecurity. Here are five critical strategies to help mitigate your cybersecurity risk:

1. Conduct Employee Background Checks

While external threats often get the spotlight, insider risks can be just as damaging. Conducting thorough background checks helps prevent potential threats before they’re onboarded. Background screening also supports compliance, verifies trustworthiness, and mitigates risk. Leading human capital management systems integrate background checks with learning management systems (LMS), creating a seamless and secure hiring and training process. As with any technology, prioritize vendors who treat security as a foundational commitment, which leads us to…

2. Vet Your Technology Partners

The platforms you use to manage payroll, benefits, and HR data can either protect your business or expose it. Before selecting a vendor, it’s essential to understand where their data is hosted (whether on-premise or in the cloud) and if it’s cloud-based, whether it’s a private or shared environment, and which provider supports it. Ask what cybersecurity protocols and monitoring systems they have in place, and whether third-party audits or certifications have been conducted on their systems. It’s also important to know if they employ full-time leaders responsible for compliance, privacy, and security. Equally critical is understanding their overall investment in cybersecurity innovation. Involving your IT or security team early in any software implementation process can prevent unnecessary risk and help avoid costly delays.

3. Deliver Frequent, Thorough Training

The first and most effective defense against cyber threats is an informed team. Regular, mandatory security training equips employees with the knowledge to identify and avoid phishing attempts, data breaches, and other malicious tactics. Many LMS platforms offer built-in security training libraries and can automate reminders, track progress, and even prevent employees from being scheduled before completing their required training. Make security awareness part of your culture, not just a checkbox.

4. Strengthen Onsite Security

Cybersecurity isn’t limited to digital systems. Physical security also plays a vital role in protecting sensitive data. Measures like security badges, access-controlled doors, monitored visitor check-ins, and surveillance cameras can significantly reduce exposure. Additional controls such as biometric access, fire suppression systems, and temperature or humidity monitoring may seem advanced, but are essential for environments where data integrity and uptime are mission-critical.

5. Put Administrative Safeguards in Place

No one wants to be caught off guard when a breach or data loss occurs. Administrative safeguards such as access control policies, formalized security procedures, routine audits, user activity monitoring, and an incident response plan provide a strong foundation for resilience. Establishing a task force to review what safeguards are currently in place and identify any gaps can help your organization stay prepared and compliant.

---

Protecting employee data is an ongoing effort, but with the right tools, partners, and policies, your organization can stay one step ahead.

Cybercrime is a daily risk that affects everyone—including your employees. Unlike most threats, data breaches can simultaneously harm individuals, compromise business operations, and damage trust across an entire organization. As cyberattacks grow in frequency and sophistication, helping your workforce stay informed and proactive is one of the most effective defenses.

Whether your employees are working in the office, remotely, or on the go, these cybersecurity best practices can help them protect their personal information and your business.

Provide Cybersecurity Training and Keep it Current

Knowledge is the first line of defense. Today’s cybersecurity training has come a long way—it’s interactive, relevant, and designed to address current threats. Encourage your employees to participate in security training, even if it’s not mandatory. The more informed they are, the more likely they are to spot suspicious activity before it becomes a problem.

Encourage Employees to Watch for Red Flags

Cybercriminals often exploit human error through phishing emails, fake text messages, and social engineering. Remind employees to stay alert to unexpected requests, especially those that urge immediate action. Misspellings, unfamiliar senders, and too-good-to-be-true offers are all warning signs. If something seems off, it probably is.

Promote Caution Before Clicking or Scanning

Phishing tactics can come in many forms: emails, QR codes, fake websites, or job postings. Encourage your team to pause and verify sources before clicking links, scanning codes, or entering personal information. A few extra seconds can prevent a major data breach.

Reinforce the Importance of Trust Indicators

Simple habits like checking for “https” in a website’s URL or spotting the padlock icon in a browser can help employees identify whether a site has a basic level of security. While not foolproof, these signals should be part of a broader awareness effort.

Require Multi-Factor Authentication (MFA)

MFA adds critical protection by requiring users to verify their identity across multiple devices. Make it a standard across your systems and educate your team about the importance of keeping MFA codes private. No legitimate organization will ever request those codes by phone, text, or email.

Discourage Storing or Reusing Passwords

Strong password hygiene is essential. Recommend a password manager to help employees securely store unique passwords for each account. Reused or saved passwords, even in notes or documents, can lead to widespread compromise if just one account is breached.

Monitor for Cybersecurity Threats

Consider offering dark web monitoring or alert services as part of your employee benefits. These tools can notify users if their personal information has been exposed, enabling faster response and added peace of mind.

---

Cybersecurity is a shared responsibility. By providing resources, reinforcing awareness, and leading by example, employers can help protect both their teams and their organizations from today’s evolving threats.

Artificial intelligence (AI) is firmly embedded in how modern workplaces operate. Employers are seeing it firsthand in polished resumes, auto-generated emails from candidates, and even in how job seekers interact with application systems. But AI isn’t just for applicants. It also holds powerful potential for HR professionals to streamline workflows, make better decisions, and improve outcomes for both the organization and its people.

According to a recent Gartner survey, 76% of HR leaders believe their organizations must adopt AI solutions within the next two years to remain competitive. Already, 38% have started using AI to improve efficiency and support better decision-making.

So how can AI support your HR team and enhance your organization’s success? One of the most promising developments is generative AI—a form of artificial intelligence that can create content, summarize data, and even write code. It has the potential to revolutionize HR in a few key ways:

3 Ways AI Can Support HR Functions

1. Content Creation – Just like ChatGPT can help draft emails, AI tools can generate clear, professional content for HR. That includes personalized candidate emails, job descriptions based on skill profiles, interview questions, policy documents, and even training materials—saving time and improving consistency.
2. Data Analysis – HR generates a tremendous amount of data—from performance ratings and salary benchmarks to engagement survey results. AI can analyze and summarize this data quickly, offering insights that help leaders make informed, equitable decisions.
3. Employee Communication – AI can enhance the employee experience by improving access to HR information. Chatbots can answer basic policy questions 24/7, learning platforms can offer personalized development paths, and onboarding can become more seamless with real-time support.

Key Considerations for Employers and AI

• Productivity – AI can reduce time spent on administrative tasks, potentially increasing HR productivity by up to 30%, according to LinkedIn research. While this may shift some entry-level roles, it also frees teams to focus on strategic, people-first initiatives.
• Security – HR handles sensitive employee data, so it’s critical to maintain privacy and compliance when using AI tools. Choose platforms with strong security measures and ensure your team understands best practices around confidentiality and data sharing.
• Adoption Strategy – It’s important to adopt AI thoughtfully. Start small, scale at a pace that fits your organization, and focus on tools that align with your HR goals and culture.

AI can’t replace the human element of HR—but it can enhance it. By using these tools wisely, HR teams can drive greater value, deliver a better employee experience, and lead the way in shaping a more innovative workplace. Counter Point is here to guide you.

When it comes to payroll, small errors can lead to big consequences.

It’s not just about missed numbers — it’s about legal exposure, damaged employee trust, and operational setbacks that can hit your bottom line harder than you think. If you’re managing a growing business, payroll isn’t just a back-office task; it’s a potential risk center.

Here’s what’s really at stake — and how taking a proactive approach can protect your business from unnecessary costs and reputational damage.

Fines, Fees, and Legal Exposure

One miscalculation on overtime or one overlooked wage disparity can trigger an investigation and result in costly resolutions. The Department of Labor (DOL) is aggressive about enforcing wage laws, and the cost of mistakes can add up quickly. In 2024, the DOL recovered over $273 million in back wages and damages for nearly 152,000 workers.

If violations are deemed willful, civil penalties for violating the Fair Labor Standards Act can reach $2,074 per affected employee. Even simple cases, contested or not, can rack up $50,000 to $100,000 in attorney fees and settlements. These financial penalties can drain your business’s resources and erode profitability.

Hidden Business Disruptions

Payroll problems don’t just cost money — they disrupt your entire business. Payroll is one of the most critical HR functions to keep everything running smoothly, and when it goes wrong, the effects ripple across the organization.

A hidden cost is the negative impact on employee experience. According to a survey by our technology partner, 55% of workers say they would consider looking for a new job after experiencing payroll mistakes with their employer. These mistakes lead to frustration, resentment, and lower morale, resulting in higher turnover.

The time spent by HR teams addressing investigations and corrections pulls resources away from critical business operations, hurting productivity. Mid-cycle payroll corrections also throw off cash flow, delay vendor payments, and disrupt financial forecasting.

Brand, Culture & Leadership Risk

Reputation and employee trust are invaluable, and payroll mistakes can severely damage both. Payroll violations, particularly if they lead to lawsuits or investigations, often make the news, creating negative publicity that’s hard to recover from.

These mistakes also hurt employee morale. Payroll errors are a leading cause of dissatisfaction, leading to disengagement, absenteeism, and a drop in productivity. Additionally, in some states, business leaders can be held personally responsible for wage violations, exposing them to significant personal liability.

The Cost of Doing Payroll Right

While the risks of payroll mistakes are high, the rewards of getting payroll right are equally significant. Accurate payroll isn’t just about compliance; it’s about protecting your employees, your business, and your reputation. By addressing payroll proactively, you can avoid costly penalties, improve employee trust, and ensure smooth business operations.

At Counter Point, we do more than run payroll — we help you get it right. Our expert team helps businesses stay compliant, reduce risk, and streamline payroll operations with the tools and support they need to move forward with confidence.

Schedule a call to learn more!

In 2022, Uber agreed to a $100 million settlement to resolve two misclassification lawsuits involving drivers in California and Massachusetts. The company had been accused of treating drivers as independent contractors rather than employees—enabling it to sidestep costs related to employer-sponsored benefits.

The practice of misclassifying workers to avoid legally required payments for disability insurance, family leave, and unemployment insurance is far too common. A 2020 audit by the New Jersey Department of Labor (NJ DOL) revealed just how widespread the issue is. In a review of 1% of New Jersey businesses, the audit uncovered 7,149 misclassified workers, $443 million in underreported wages, and nearly $14 million in unpaid contributions to state programs.

New Jersey uses one of the strictest standards in the country—the ABC Test—to determine whether a worker can be classified as an independent contractor. Under this test, a worker is presumed to be an employee unless all three of the following conditions are met:

1. The worker is free from control or direction.
   
2. The work is outside the usual course of the company’s business or performed offsite.
   
3. The worker is engaged in an independently established business.
   

For companies like Uber and Lyft, drivers are unlikely to meet the second condition, as their work directly aligns with the company’s core service. As such, they may be deemed employees entitled to the same legal protections and benefits.

In response to these concerns, the NJ DOL has proposed a new rule that would classify drivers for app-based companies as regular employees—not freelancers. This rule extends beyond transportation companies and would bring sweeping changes to the gig economy and signal heightened enforcement statewide.

What Can Employers Do Now?

To stay ahead of these changes and avoid penalties, New Jersey businesses should act now:

• Audit contractor relationships: Review every independent contractor agreement for compliance with the ABC Test.
  
• Examine policies and contracts: Ensure your employment practices align with both existing laws and proposed changes.
  
• Engage in the rulemaking process: Consider submitting public comments if the proposal impacts your operations.
  

Misclassification is a serious risk, with real financial consequences. Proactive compliance is not just smart business—it’s essential. Counter Point can help your organization navigate compliance so you can focus on more strategic tasks. Contact us today!