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Two recent federal regulatory updates could have implications for employers and workers, particularly in industries with significant overtime activity and warehouse or distribution operations.

  • IRS Updates “No Tax on Overtime” Guidance
    • On August 6, the Internal Revenue Service issued updated guidance addressing the federal “No Tax on Overtime” deduction. The new guidance is contained in Fact Sheet FS-2026-13, which revises the FAQs previously issued in FS-2026-01 in January.
    • The updated guidance includes a dedicated section addressing employer information and requirements, providing additional direction to employers on their responsibilities related to the overtime deduction.
    • Employers should review the revised FAQs to understand how the changes may affect payroll, employee reporting and compliance obligations as the deduction is implemented.
  • OSHA Revises Warehousing and Distribution Center Enforcement Program
    • The Occupational Safety and Health Administration also recently updated its National Emphasis Program (NEP) for warehousing and distribution center operations. OSHA issued the revised program on July 6, with the updated enforcement guidance taking effect July 31. The revised NEP is scheduled to remain in effect through July 31, 2031.
    • The update makes several changes to OSHA’s inspection and enforcement approach.
    • Among the most significant changes, OSHA removed “high injury rate retail establishments” from the scope of the NEP. The agency also eliminated mandatory screening requirements for ergonomic and heat hazards, giving OSHA inspectors greater discretion in determining when those hazards warrant additional attention.
    • The revised guidance also changes how Area Offices handle inspections involving potentially serious issues. Under the 2023 NEP, Area Offices were required to expand inspections under certain circumstances. The updated program instead clarifies that Area Offices have discretion to expand inspections based on fatalities or catastrophes, complaints or referrals.

What Employers Should Know: The two updates highlight the importance of employers staying current with federal regulatory guidance. For employers with significant overtime operations, the IRS guidance provides additional information on the “No Tax on Overtime” deduction and related employer requirements.  For warehousing, distribution and related operations, OSHA’s revised NEP provides greater flexibility in how inspections are conducted while maintaining a focus on workplace hazards. Employers should review their safety and compliance programs in light of the revised enforcement approach, particularly regarding ergonomics, heat exposure and circumstances that could lead to expanded OSHA inspections.