Payroll, HR, and the Big Beautiful Bill

Software Solutions recently hosted a timely and much-needed conversation on one of the most talked-about legislative changes of the year: the Big Beautiful Bill and its sweeping impact on public-sector employers. If you missed the live session (or want to rewatch specific sections), the full recording is available at the end of this article.

This one-hour webinar brought clarity to a bill that has left many HR, payroll, and finance teams with more questions than answers. With nearly 900 pages of regulatory changes, the bill introduces new compliance expectations across payroll rules, job classification, overtime eligibility, leave requirements, and benefits administration.

To help our audience sort through it, Danielle Bergey, SSI’s Senior Marketing Manager, moderated a discussion with two trusted subject-matter experts:

• David Frantz, Labor Attorney at Zashin & Rich

• Neal Shah, Partner and Labor & Employment Attorney at Frost Brown Todd

Both attorneys have decades of experience advising public agencies and joined us to translate the bill’s legal and operational impacts into practical guidance.

Why This Bill Matters for Public Agencies

The Big Beautiful Bill brings significant changes to the Fair Labor Standards Act (FLSA), benefits eligibility rules, and employer documentation requirements. During the session, both attorneys emphasized that public-sector agencies are uniquely exposed. Not only because of complex pay structures, but also because many already operate with lean teams, tight budgets, and strict audit expectations.

Several themes emerged early in the conversation:

• Many compliance failures will stem from inaccurate job classification and inconsistent application of policies across departments.

• The bill’s changes to overtime calculations and benefits eligibility will have budget impacts, especially for small municipalities.

• Seasonal, part-time, and variable-hour employees will require more precise tracking and potentially new documentation workflows.

• Unionized environments will need to review current contract language to identify areas that may require renegotiation.

It’s important to highlight that, at this stage, the IRS has provided limited direction on these changes. Staying in regular contact with your tax and labor counsel over the coming months will be vital, as new regulatory updates become available.

What Employers Must Plan For

The bill introduces new or updated requirements in several key areas. According to Neal, agencies should expect increased scrutiny in:

1. Timekeeping and Overtime

The bill reshapes how certain roles qualify for exempt status. That shift alone may move some employees into overtime eligibility, increasing costs and requiring updated schedules, staffing assumptions, and budget projections.

Shah noted that small agencies are most at risk, not because they’re doing anything wrong, but because they typically have fewer layers of review and older processes that rely heavily on manual calculations.

2. Job Classification Accuracy

Both panelists agreed: this will be one of the biggest pitfalls.

Many public employers are already behind on updating job descriptions. The bill adds urgency—especially for hybrid roles that combine administrative, technical, and supervisory duties. Misalignment between actual duties and documented duties increases exposure to both DOL disputes and employee claims.

3. Leave and Benefits Administration

David Frantz explained that the bill introduces additional requirements around tracking leave, documenting eligibility, and communicating benefits changes. Agencies may need to modify onboarding materials, annual notices, and employee handbook sections.

4. Documentation and Recordkeeping

“Document everything” was a recurring point. If a process affects pay, eligibility, leave, overtime, schedules, or job classification, it will likely require more consistent documentation going forward.

Where Litigation Risk Is Likely to Grow

Both panelists were candid: litigation risk will rise before it falls. The most vulnerable areas include:

• Misclassification of exempt vs. non-exempt employees

• Incorrect overtime calculations, especially where stipends, supplemental pay, or irregular work schedules exist

• Failure to apply updated leave and eligibility rules consistently

• Manager decisions that contradict policy (even unintentionally)

Frantz reminded employers that litigation often starts with small inconsistencies—a supervisor makes an exception for one employee, a policy is applied differently in two departments, or documentation is missing for an eligibility decision.

Unionized Workplaces

Union environments face an added layer of complexity. Many CBAs reference FLSA standards directly, meaning shifts in those standards may automatically affect contract terms.

The attorneys advised agencies to:

• Flag contract areas likely to be affected

• Start informal conversations with union leadership early

• Prepare for bargaining in the next contract cycle

While not all agencies will need immediate renegotiation, every agency should review their agreements now to identify potential conflicts.

When Do Agencies Need to Act?

One of the most common questions: “Should we start changing things now, or wait for guidance from the DOL or IRS?”

The consensus was:

• Agencies should not wait to review policies, job descriptions, classification standards, and documentation workflows.

• However, agencies should avoid finalizing major structural changes until additional federal guidance is released.

• Internal preparation now will prevent last-minute panic later.

Shah summarized it neatly: “Do the internal work now so you’re not scrambling, but leave room to adjust once official guidance comes out.”

3 Things Every Agency Should Do in the Next 30 Days

David and Neal offered a short list of immediate, practical steps:

1. Audit job descriptions and classification decisions.

   Look for outdated or multi-function roles that may no longer qualify as exempt.

2. Review timekeeping and pay processes.

   Especially for employees with stipends, multiple pay types, or unusual schedules.

3. Train your managers.

   Many compliance failures originate from supervisors who don’t realize a change affects how they approve time, assign duties, or notify employees.

Audience Q&A: Real-World Challenges

The audience raised thoughtful questions about:

• Adjusting overtime budgets

• Handling seasonal positions

• Communicating changes to employees

• Avoiding inconsistent practices across departments

• What policies to update first

• What documentation to start collecting now

The attorneys provided actionable, context-specific guidance—reinforcing that communication and consistency will be essential themes in the months ahead.

Watch the Full Recording

If you missed the session or want to revisit the guidance, the recording is now available:

👉 Watch the Recording