Pay Matters! May 2018
We know, you’ve got a lot going on. So much, in fact, that you don’t have a ton of time to worry about what’s new in the payroll world. That’s where we come in!
Want to make sure you’re not missing important developments in the payroll scene? Never fear: we’ve got the round-up of payroll news and updates that you need to know in order to stay in the loop. This is Pay Matters – the May 2018 edition.
Read on to stay informed and stay in compliance with relevant alerts and insights that matter most for your payroll.
FEDERAL PAYROLL UPDATES
DOL Releases Clarification on Tip Pool Rules
On April 6, the U.S. Department of Labor released a field bulletin providing further clarification on the FLSA tip ownership and pooling amendment included in the Federal budget passed by Congress in March.
The DOL’s guidance clarifies that under the FLSA amendment, employers are prohibited from keeping employees’ tips, managers and supervisors cannot participate in tip pools, and back of the house workers who do not earn tips can participate in tip pools as long as they are paid at least the federal minimum wage of $7.25 per hour.
The DOL notice also defines a supervisor and manager as an employee who has the authority to hire and fire, directs the work of two or more people, and has the primary duty of management.
State laws may impose different requirements regarding participation in tip pools and the definition of supervisor and manager. Be sure to speak to your legal advisor before making any changes.
IRS Releases FAQ on FMLA Employer Credit
On April 9, the IRS released an FAQ on the business credit available to employers who provide paid family and medical leave to their employees.
The recently passed law grants a business tax credit to employers who provide at least 2 weeks of leave to employees and pay them at least 50% of their regular wages. The credit ranges from 12.5% to 25% of the cost of paid leave. Employers can claim a credit for up to 12 weeks of paid leave for employees who have been employed by the business for at least a year and whose annual income does not exceed $72,000.
The IRS has not yet explained how the credit will be claimed by businesses.
2018 HSA Contribution Limit Back to $6,900
On April 26, the IRS announced that the 2018 limit on Health Savings Accounts (HSAs) for individuals with family coverage under a high deductible plan will remain at $6,900.
The $6,900 limit was announced originally on May 4, 2017, however on March 5, 2018 the IRS announced a reduction of the contribution limit to $6,850. As this reduction would have required complex corrective actions for many individuals, the IRS provided relief in Revenue Procedure 2018-27, and reverted the annual cap back to $6,900.
Salary History Bans on the Rise
With the intent of closing the gender wage gap, an increasing number of states and localities are imposing restriction on employers’ use of prior employment salary history in making compensation decisions for onboarding employees.
The general theory behind this trend is that using salary history to determine current compensation perpetuates gender wage gaps that existed because of past discrimination. If employers do not use salary history in their decision making, they may be more likely to offer compensation based on merit. California, Delaware, Massachusetts, Oregon, New Jersey and New York all currently have laws that restrict the use of salary history information, and many localities have recently passed legislation.
As the trend grows, it is increasingly important for employers to familiarize themselves with the laws in the states where they conduct business and to consult legal advice when necessary.
STATE PAYROLL UPDATES
Expansion of New Jersey Equal Pay Protections
Effective July 1, 2018, New Jersey employers must comply with new legislation expanding the state’s equal pay law.
Under the new Senate Bill 104, Employers are prohibited from paying an employee who is a “member of a protected class” less than employees who are not members of this class, assuming they perform substantially similar work. Pay differentials are, however, permitted on the basis of merit or seniority. In addition, employers cannot reduce the pay of the non-protected employee to satisfy equal-pay requirements. The law also clarifies that an employer is prohibited from taking adverse action against an employee for discussing wage information with another current or former employee or with a government agency or lawyer.
New Jersey’s list of protected categories includes but is not limited to race, color, marital status, gender, disability, and pregnancy.
As always, Viventium advises you to review your pay practices and work with legal counsel to ensure compliance.
Oregon Enacts Transit Tax
Effective July 1, 2018, employers must begin withholding a 0.1% transit tax on all Oregon residents as well as all nonresidents who work in Oregon. Employers must report and remit the taxes withheld quarterly and annually as well as reconcile the tax on an annual reconciliation return.
Don’t get this new tax mixed up with the Lane or TriMet transit payroll taxes, which are employer taxes. The new state transit tax is imposed on employees, although employers are responsible to withhold and remit.
The new Oregon tax forms are now available.
Viventium will be supporting this new tax and will automatically begin withholding it from your employees’ paychecks beginning with payrolls dated on or after July 1, 2018.
Massachusetts Pregnancy Fairness Act
On April 1, 2018, the Massachusetts Pregnant Workers Fairness Act went into effect, requiring employers to make reasonable accommodations for pregnancy-related conditions. Among other things, reasonable accommodation includes modified work schedules, longer or more frequent breaks, assistance with manual labor, and time off after birth to recover. Employers must also provide a private, non-bathroom space for women to express milk.
Employers must provide written notice of their rights under the law to new employees at the time of hire, and within 10 days of an employee notifying an employer of pregnancy.
LOCAL PAYROLL UPDATES
NYC Proposal to Prohibit Required After Work Emails
On March 22, a bill was proposed to prohibit New York City employers from requiring employees to check and respond to emails and other electronic notifications after work hours and while taking PTO. If enacted, the bill would take effect immediately and penalties would be imposed for violations.
The proposed bill would apply to private employers with 10 or more employees in NYC. An employee is defined as someone working more than 80 hours per the calendar year in New York City. Employers would be required to adopt a written policy and determine the usual work hours for each category of employee.
The bill would not apply to employees required to be on call 24 hours when they are working.