Pay Matters! February, 2019
Welcome to Pay Matters, our monthly roundup of all the payroll and compliance news that you must know.
Stay informed and in compliance with our monthly payroll alerts and insights.
Overtime Changes May be on the Way
2019 may be the year that marks a major change to the current overtime rules.
The US Department of Labor (DOL) sent a proposed new overtime rule to the Office of Management and Budget (OMB) for review. Public release of the proposal is expected soon. The proposal will raise the salary threshold at which executive, administrative, and professional employees are exempt from overtime pay. Although the amount of the proposed threshold is unknown, Labor Secretary Alexander Acosta stated that it would be approximately $33,000 per year. This is significantly lower than the Obama Administration’s proposed threshold of $47,476, although still a substantial increase from the current $23,660 threshold. The Obama-era overtime rule was scheduled to go into effect December 1, 2016 and would have affected the pay of over 4 million workers nationwide. At the last minute, a Texas federal court blocked the ruling in an emergency motion. The ruling was later invalidated on August 31, 2017.
This new proposal was a long time in the making. In July 2017, the DOL issued a request for information to help determine a new salary threshold. This comment period ended September 25, 2017. And the DOL has just submitted its proposal to the OMB. The future of the new overtime rule remains uncertain. The proposal could stall in the OMB, or it may not make it through Congress. Viventium will continue to monitor the situation and keep you updated on future developments.
IRS Offers Tax Reform Relief to Taxpayers
Due to the Tax Cuts and Jobs Act (“Tax Reform”), the IRS announced a waiver of the estimated tax penalty for taxpayers who paid at least 85% of total liability either through federal income tax withholding or quarterly estimated tax payments. The percentage in previous years was 90%.
Stated simply, if you paid at least 85% of your 2018 taxes throughout 2018 through paycheck withholding or estimated payments, you won’t pay a penalty even if your tax return shows an underpayment. This relief is meant to help taxpayers who didn’t have enough taxes withheld due to the major tax overhaul passed in December 2017.
The IRS still encourages all employees to check their withholding for 2019 to ensure they have the right amount of taxes withheld and offers tools to help make the determination.
NY Overtime Exemption Salary Increase
Although the federal overtime exemption salary has not increased since 2004, the salary threshold for workers in New York continues to rise annually together with minimum wage.
The minimum salary requirement for executive and administrative employee to be exempt from overtime increased on December 31, 2018 as follows:
- New York City, 11 or more employees: $1,125.00 per week, or $58,500 per year
- New York City, 10 or fewer employees: $1,012.50 per week, or $52,650 per year
- Nassau, Suffolk & Westchester counties: $900.00 per week, or $46,800 per year
- Remainder of the state: $832.00 per week, or $43,264 per year
If an employee is not paid at least the above salary threshold, he must be paid time and a half for hours worked in excess of 40 in a workweek.
For more information check out the Minimum Wage Order for Miscellaneous Industries and Occupations.
New Jersey to Raise Minimum Wage
Employees in New Jersey will soon see a significant increase in minimum wage.
After months of deliberation and negotiation, an agreement was reached to raise New Jersey minimum wage from the current $8.85 per hour, to $10 per hour on July 1, 2019 and then again to $11 per hour on January 1, 2020. Minimum wage will then continue to increase by $1 every January 1 until reaching $15 per hour on January 1, 2024.
Seasonal workers and small businesses with five employees or less will see a slower increase, with minimum wage reaching $15 per hour by January 1, 2026.
The minimum wage increase is expected to impact over 1 million New Jersey workers.
For more information click here.
Michigan Paid Sick Leave and Minimum Wage Changes
Michigan Governor Rick Snyder signed Senate Bills 1171 and 1175 to amend and limit Michigan’s paid sick leave and minimum wage laws.
Effective March 29, 2019, The Paid Medical Leave Act will no longer cover all private employers, but rather only those with 50 or more employees. “Exempt” employees who do not receive overtime are no longer eligible to accrue Paid Family Leave, nor are variable hour employees as defined by the Affordable Care Act. In addition, the accrual rate of the paid leave will be 1 hour for every 35 hours worked, rather the previously passed 1 hour for every 30 hours worked. The amendment also limits the reasons an employee may take leave, revises the notice requirements, and narrows the definition of covered family members.
Under the original bill passed in September, Michigan minimum wage was set to increase from $9.25 to $10.00 per hour on April 1, 2019, with annual increases every January 1 until reaching $12 per hour on January 1, 2022. Under the amended bill, minimum wage will only increase by $0.21 to $0.26 per year, reaching $12.05 only in 2030. The first increase from $9.25 per hour to $9.45 per hour will take place on March 29, 2019. In addition, the tip credit has been reinstated to 38% of minimum wage. The tip credit had originally been scheduled to be phased out.
Washington Launches Paid Family and Medical Leave Website
To assist with their new Paid Family and Medical Leave Law, the Washington Employment Security Department (ESD) has launched a website with information for employers, employees, and benefit providers. The website contains FAQs and an employer toolkit.
The employee benefit takes effect January 1, 2020 and will provide workers with up to 12 weeks of paid medical leave and up to 12 weeks of paid time off to care for a new child or sick family member. The leave is capped at 16 weeks for employees who require both types of leave in one year. Eligible employees will receive up to 90% of their wages, capped at $1,000 per week.
Beginning January 1, 2019, employees and employers began contributing to the program. Employers with 50 or more employees pay a premium equal to 0.4% of employees’ wages up to the Social Security wage base ($132,900). However, employers can share this cost with their employees by withholding up to 63.33% from the employees’ paychecks. The employer must pay the remaining 36.67%. Employers with less than 50 employees will withhold premiums from employees but are not required to pay the employer share. Premiums must be remitted to the Washington ESD on a quarterly basis.