Dear CGC Customers,

The purpose of this communication is to assist with explaining the Federal Exempt Overtime Premium that is starting this year. In this email, we will discuss the premium and the equation used to calculate the premium credit. Useful links are included at the bottom of the email.

Informational video and PDF are available in the Knowledge Center under the Quarter-End and Year-End section at https://cgcportal.computerguidance.com/.

The Overtime Deduction will be for 2025 through 2028, “individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay – such as the “half” portion of “time-and-a-half” compensation – that is required by the Fair Labor Standards Act (FLSA) and that is reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.”

“Employers and other payers are required to file information returns with the IRS (or SSA) and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year.” This year, the W-2 box 14 is used.

This information came from the One, Big, Beautiful Bill link below.

The calculation as per the government:

Add all Hours Worked for the week.

Add Gross Pay (use reg rate for ALL hours. Since the premium is only for over 40 hrs/week we start with the reg rate).

Divide Gross Pay by Hours Worked to get the Average Worked Rate.

Divide Average Worked Rate by 2 to get the Premium Rate (divide by 2 to get the half portion of the rate).

Multiply the Overtime Hours Worked (hours over 40) by the Premium Rate to get the Premium Paid.

What the calculation means is that the Overtime Premium Deduction is not based on the type of pay a qualified person received during the week. It is based on the number of hours they worked in that week.

Because the calculation is based on per week, if the hours were entered on a biweekly basis there will be manual editing that must be done. The recommendation is to export out the weekly view and use that to manually calculate the overtime premium paid and then export the summary view and edit the amounts appropriately. Going forward it is recommended to discuss the change in entering the hours weekly vs editing the amounts at the end of the year on the spreadsheet.

Links with more information:

One, Big, Beautiful Bill Act: Tax deductions for working Americans and seniors

Overtime Pay

Fact Sheet #23: Overtime Pay Requirements of the FLSA

If you need further assistance beyond the information provided here, we will need you to please submit an incident. Customer Support Site .

Thank you! 

The 2025 Year End Update (Q54) is now available for all Production and Test environments.

The minimum eCMS Release level for (Q54) is 4.2 Fix Pack 3 – Hot Fix 311.
This is the same minimum release level required for the 2025 3^rd Quarter Update (Q53).

The (Q54) update does not require users to be logged out of eCMS. The changes will take effect immediately with the exception to eForms changes. They will need to be restored as usual.

The 2025 Year End Update (Q54) Release Notes document is located on the CGC Portal/Knowledge Center. 

Please review the documentation and schedule installation as soon as possible.

For hosted customers:
Since the (Q54) update can be installed while your users are logged into eCMS. Focusing on Production environments, the Software Delivery Team will be logging onto your production environment in the days to come to install the (Q54) update.

If we discover that your system is not at Hot Fix 311 or higher, we will bring your environment up to HF311 sometime after 5:00pm local time.

If you prefer a specific date/time for these updates or have any questions.
Please submit a ticket, requesting to be contacted by Software Delivery.

For non-hosted/on-premise customers:
Please submit a ticket requesting the installation of 2025 Year End Update (Q54) into your Production / Test environments. 

Following the install of updates and after nightly processing, the updated eCMS Release Level will display in the lower right hand corner of the eCMS menu. Thank you! 

2025 Year-End Processing Webinar Presentations, Webinar Recordings and User Guides for the United States and Canada are available and can be viewed on the CGC Portal/Knowledge Center under the eCMS Quarter-End and Year-End Documentation. 

…

2025 Year-End Processing Documentation

2025 Year-End Processing Webinar Recordings and User Guides 

For year 2025 only a presentation for changes for Year-End Processing are recorded. Year 2022 webinar recording, webinar presentation file and user guides both for US and Canada remain the bases for the 2025 YE Processing documentation. Customers may also want to review the 2023 and 2024 YE Processing changes for US and Canada. These are all posted on the CGC Portal. 

Please also note that we have additional documentation available on the CGC Portal under the Quarter-End, Year-End and Federal Reporting Documentation webpage:

• Federal Exempt Overtime Premiums Reporting – Overview Video
• Federal Exempt Overtime Premiums Reporting – User Guide
• Minnesota State Paid Family Leave – User Guide

We are diligently preparing the Year-End Processing Update and the accompanying Release Notes. We will share an additional communication next week.