The Mid-Year Compliance Check-In: Four Issues Employers Should Address Before Q3

June serves as an important compliance checkpoint for employers.

At the halfway point of the year, organizations have enough data and operational insight to identify emerging risks while still having time to make corrections before they result in audits, penalties, employee disputes, or year-end reporting challenges.

A proactive review now can prevent significant headaches later.

Quick Answer: Before Q3, employers should review four areas: ACA affordability and eligibility tracking, exempt employee classifications, multi-state payroll compliance for any new-state hires, and retirement plan administration under SECURE 2.0. Catching discrepancies now is far less costly than correcting them during year-end reporting or an audit.

Here are four areas every employer should evaluate before entering the second half of the year.

1. How Should Employers Review ACA Affordability and Eligibility at Mid-Year?

Affordable Care Act compliance remains one of the most common areas where employers encounter unexpected penalties.

Mid-year is an ideal time to review:

• Employee eligibility tracking
• Measurement and stability period administration
• Affordability calculations
• Benefit offer documentation

Small discrepancies can become much larger reporting issues by year-end. Identifying and correcting problems now can significantly reduce future penalty exposure and improve reporting accuracy.

2. How Do You Review Exempt Employee Classifications Before Q3?

Job responsibilities often evolve faster than job descriptions.

An employee who qualified as exempt at the beginning of the year may no longer meet exemption requirements due to changes in duties, reporting structure, or workload.

Employers should review:

• Exempt versus non-exempt classifications
• Current job duties
• Salary basis compliance
• Overtime exposure

Addressing classification issues proactively can help limit potential back-pay liability and reduce legal risk.

3. What Multi-State Payroll Compliance Should Employers Check Mid-Year?

Many employers have expanded their workforce footprint through remote work and hiring in new states.

If your organization has added employees in new jurisdictions this year, now is the time to confirm that all payroll and compliance requirements have been properly established.

Key areas to review include:

• State tax registrations
• Payroll withholding requirements
• State unemployment insurance accounts
• Paid leave programs
• State-specific employment regulations

Ensuring compliance before third-quarter filings begin can prevent costly corrections and penalties.

4. What SECURE 2.0 Retirement Plan Changes Should Employers Review?

Retirement plan compliance continues to evolve as SECURE 2.0 provisions are implemented.

Employers should review whether their current plan administration processes align with both current requirements and upcoming changes.

Areas deserving attention include:

• Catch-up contribution rules
• Roth contribution requirements
• Participant communications
• Plan administration procedures
• Recordkeeping practices

A mid-year review can help organizations avoid last-minute adjustments and ensure a smoother year-end process.

How Can Employers Stay Ahead of Compliance Risks Before Q3?

The best time to address compliance issues is before they become problems.

By reviewing ACA administration, employee classifications, multi-state payroll requirements, and retirement plan obligations now, employers can reduce risk, improve operational efficiency, and enter the second half of the year with confidence.

Key Takeaways:

• Mid-year is the ideal checkpoint for ACA compliance. Small discrepancies in eligibility tracking or affordability calculations become much larger reporting issues by year-end
• Exempt employee classifications can become outdated as job duties evolve. An employee who qualified as exempt in January may no longer meet exemption requirements by June, creating back-pay liability
• Any employer who added headcount in new states this year should confirm that state tax registrations, payroll withholding, and unemployment insurance accounts are properly established before Q3 filings begin
• SECURE 2.0 continues to change retirement plan requirements, including catch-up contribution rules and Roth contribution requirements. A mid-year review prevents last-minute scrambling at year-end
• The best time to address compliance issues is before they become problems. A proactive mid-year review costs far less than correcting issues during an audit or year-end reporting

If your organization would benefit from a compliance review or risk assessment before Q3, INFINITI HR can help.

Our team works with employers across the country to simplify compliance, strengthen HR operations, and reduce workforce-related risk before issues arise.

Check out the recent blog, From Chaos to Clarity: Building a Year-Round Risk Prevention Culture, or come back for additional pieces on human resources, payroll, insurance, and benefits.

Supporting your managers starts with the right HR infrastructure. Talk to our team to learn how INFINITI HR helps organizations lead more effectively.