Welcome to our Spring 2023 edition of Pay Matters – our roundup of all the payroll and compliance news that you must know.
Read on to stay informed and in compliance with relevant alerts and insights that matter most for your payroll.
On February 21, the IRS published final regulations, TD 9972, expanding the requirement to electronically file employment tax forms, including Forms 1099, Forms W-2, and Affordable Care Act (ACA) Forms 1094-C and 1095-C. These new requirements are so dramatically expanded that nearly all employers across the nation will be impacted.
Under the final regulations, an organization that files 10 or more information returns in a calendar year will be required to electronically file (e-file), starting with returns due in 2024. The current threshold is 250 returns. In addition, organizations must generally aggregate all information return types to determine if they meet the 10-return threshold. For example, if an organization issues five W-2s and five ACA 1095-Cs, e-file will be required for BOTH sets of forms in early 2024 for the 2023 payroll year. This is a drastic change from current regulations, which allow organizations to apply the threshold individually to each type of information return.
The final regulations also specify that if an organization was required to e-file an original information return, all subsequent corrections (amendments) must be e-filed as well. If returns are allowed to be filed on paper, corrections may continue to be filed on paper.
The expanded requirements apply to all returns filed on or after January 1, 2024. Thus, your 2023 W-2s (if 10 or more) will need to be e-filed.
The IRS has said penalties may apply for non-electronic filing of information returns.
On February 6, New Jersey enacted Assembly Bill No. A1474/S511, known as the “Temporary Workers’ Bill of Rights.”
Under the law, temporary workers (temps) are granted numerous labor and employment protections including the same pay and benefits as permanent employees. In addition, temp staffing firms must be certified by the Director of the Division of Consumer Affairs in the Department of Law and Public Safety.
Staffing agencies and other temporary help service firms are advised to review their policies and make any updates necessary to ensure compliance with the new requirements.
Arkansas Governor Sarah Huckabee Sanders signed into law House Bill 1026, which prohibits local governments in the state from enacting income taxes. The bill is a preemptive step as the governor and lawmakers aim to phase out state income tax.
Effective January 1, 2024, Illinois employers will be required to start accruing paid leave for their employees.
Under Public Act 102-1143, employees will begin to accrue paid leave at the rate of 1 hour per every 40 hours worked, up to a 12-month minimum of 40 hours. Employees can begin using their accrued leave beginning March 31, 2024, or 90 days after their employment begins, whichever is later. Unused leave must be carried over to the following 12-month period.
Employers can choose to frontload 40 hours of leave on their first day of employment or on the first day of the designated 12-month period. Employers who do so are not required to carryover unused leave.
Employees may use the paid leave for any reason, and employers are not allowed to require that employees provide a reason for taking leave.
Employer must post a notice summarizing the paid leave law in a conspicuous place on their premises. Posters are expected to be made available by the Illinois Department of Labor.
Illinois employers are advised to review their paid leave policies for compliance. Viventium’s PTO setups can keep track of PTO accruals, use, and balances. Reach out to your Dedicated Client Service Team if you are interested in setting up a PTO plan in Viventium.
On January 26, a Michigan Court of Appeals overturned a minimum wage increase and mandatory paid sick and safe time leave (PSSL) expansion that was scheduled to go into effect on February 20, 2023.
As a result, Michigan minimum wage remains at the current $10.10 per hour, rather than increasing to $13.03. Tipped minimum wage remains at $3.84 per hour. The tipped minimum wage would have increased to $11.73 an hour before being eliminated altogether and putting tipped employees at the regular minimum wage on January 1, 2024. In addition, Michigan PSSL continues to apply only to employers of 50 or more employees. The annual cap on PSSL remains at the current 40 hours instead of jumping to 72 hours.
It is likely that the battle in Michigan over minimum wage and PSSL benefits is not over, so Viventium recommends that Michigan clients visit the LEO minimum wage and news webpages frequently to check for updates, and as always, consult with legal and benefits experts before making changes to pay rates and PTO plans.
Effective December 16, 2022, due to a labor law amendment signed by Governor Hochul, all New York State employers must post their required employee rights notices both physically (already required) and electronically (new requirement) via their website or by email.
In addition, employers must notify employees that these workplace notices are available electronically.
We strongly suggest you review your employee notification polices with your legal counsel to determine how to promptly meet your new labor law obligations.
The Council of the District of Columbia has delayed the effective date of the Tip Credit Elimination Act.
On November 8, 2022, D.C. voters approved Initiative 82, which incrementally eliminated the tip credit employers can take when paying tipped employees. The first increase to cash wage from $5.35 per hour to $6.00 per hour was scheduled to take place January 1, 2023, but has now been delayed until May 1, 2023.
The second increase to $8.00 is still scheduled to take effect on July 1, 2023, and all subsequent increases remain in place as well.
Washington, D.C.: Effective July 1, 2023, minimum wage will rise from $16.10 to $17.00 per hour.
City of Los Angeles, CA: Effective July 1, 2023, minimum wage will increase from $16.04 to $16.78.
Los Angeles County, CA: Effective July 1, 2023, minimum wage will increase from $15.96 to $16.90.
Santa Monica, CA: Effective July 1, 2023, minimum wage will increase from $15.96 to $16.90.
Prince George’s County, MD: Effective July 1, 2023, minimum wage will increase from $15.60 to $16.60.
Montgomery County, MD: Effective July 1, 2023, minimum wage will increase from $15.65 to $16.70 for large employers (at least 51 employees).
City of Santa Fe, NM: Effective March 1, 2023, minimum wage increased from $12.95 to $14.03.
Santa Fe County, NM: Effective March 1, 2023, minimum wage increased from $12.95 to $14.03.
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