Employers Must Begin Using the New Form Jan. 1

On Dec. 5, 2019, the Internal Revenue Service released an updated version of its W-4 form, also known as the “Employee’s Withholding Certificate.” 

Employers use IRS Form W-4 to determine each employee’s federal tax withholdings. The new form is intended to harmonize tax withholding declarations with the Tax Cuts and Jobs Act, which affected individuals for the first time during the last tax filing season. Employees may complete a new W-4 each year or each time they experience a change in their personal financial situation. However, the new form does not invalidate prior versions, and employers are not expected to replace W-4 forms from previous years with the 2020 version. 

Employers should become familiar with the updates to IRS Form W-4 and make it available for all new hires and employees who wish to amend their withholding declarations in 2020.

Final Rule Clarifies What to Include in the Regular Rate

On Dec. 12, 2019, the U.S. Department of Labor (DOL), announced a new final rule that clarifies how to calculate an employee’s regular wage rate under the Fair Labor Standards Act (FLSA). If the rule is officially published in the Federal Registered as scheduled, the final rule becomes effective on Jan. 15, 2020.

Calculating the regular rate is an essential first step when determining an employee’s overtime compensation. Under the FLSA, an employee’s regular rate includes all forms of compensation paid to that employee in a workweek. The final rule clarifies what qualifies as compensation. 

The DOL’s stated objective with this rule is to provide more certainty for employers that offer additional perks to their employees, but aren’t sure of whether these benefits should be counted as income under the FLSA.

Employers should become familiar with this final rule and adjust their payroll practices to account for this new guidance on what should be considered compensation by Jan. 15, 2020.

Ordinance Was Scheduled to Take Effect Dec. 1

San Antonio’s paid sick leave law will not go into effect Dec. 1 as scheduled as a result of a temporary injunction granted Nov. 22. The indefinite stay by the District Court in Bexar County marks the latest action in litigation against the ordinance by a coalition of business owners, joined by the state Attorney General.

The original ordinance requiring all employers to provide earned paid sick time to their San Antonio employees was passed in August 2018. In July 2019, the city agreed to delay implementation of the measure until Dec. 1, 2019, pending amendments to the ordinance, which were passed in October 2019. As part of the amendments, the benefit provided under the law was renamed “sick and safe leave.”
 
Employers should monitor the status of the ordinance and be prepared to comply with its requirements should a new implementation date become effective.

Comments on Proposed Rule are Due by Dec. 5

On Nov. 5, 2019, the U.S. Department of Labor (DOL) published a proposed rule to update the “fluctuating workweek” method for calculating employee overtime wages under the Fair Labor Standards Act (FLSA). The fluctuating workweek method provides employers a cost-saving option to compensate employees who are not exempt from the Act’s overtime wage payment requirements.

If approved, the proposal would enable employers to pay bonuses, shift differentials and other incentive payments to employees who are paid under the fluctuating week method. The proposed changes were issued to clarify conflicting court rulings regarding this method. 

This publication is only a proposed rule, so it does not impose any new requirements on employers. However, the DOL is inviting employers to review this proposal and submit their comments, if any, to the DOL by Dec. 5, 2019 by mail or through the Federal eRulemaking Portal.

New Requirements Take Effect Jan. 1, 2020

The California Department of Industrial Relations (DIR) has published updates to the minimum salary threshold that computer employees, physicians and surgeons must receive in order to qualify for the state’s overtime exemptions. The DIR reviews and adjusts these rates each as necessary to reflect the cost of inflation. 

The hourly wage rate for physicians will increase from $82.72 per hour to $84.79 per hour on Jan. 1, 2020. Similarly, the minimum salary requirements for computer employees will increase from $45.41 per hour to $46.55 per hour starting Jan. 1, 2020. For the computer employee exemption, the DIR also specified a new $96,968 annual salary and an $8,080.71 monthly rate starting Jan. 1, 2020.

Click here for more information on the updated salary level for physicians and surgeons, or here for more information on the updated salary level for computer employees.

Contribution Limit to Increase $50 in 2020

The IRS has announced that the contribution limit for health flexible spending arrangements (health FSAs) will be $2,750 in 2020. For 2019, the contribution limit is $2,700.

401(k) Contribution Limit Increased to $19,500

The IRS has announced that the amounts employees can contribute to 401(k)s and some IRAs will increase in 2020. In particular:

• The employee contribution limit for 401(k) plans will be $19,500, up from $19,000 in 2019. The catch-up contribution limit for employees aged 50 and over will be $6,500, up from $6,000.
• The employee contribution limit for IRAs will remain $6,000. The catch-up contribution limit for employees aged 50 and over also remains unchanged, at $1,000.
• The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans will increase to $13,500, up from $13,000 in 2019.

Click here for more information.

Employers Are Not Required to Obtain HPIDs for Health Plans

In 2012, the Department of Health and Human Services (HHS) released a final rule that required certain health plans to obtain their own health plan identifiers (HPIDs) and start using them in HIPAA standard transactions. 

After issuing the final rule, HHS received feedback that the HPID’s implementation would be disruptive, costly and counterproductive. Based on this feedback, on Oct. 31, 2014, HHS delayed the enforcement of the HPID requirement until further notice. 

On Oct. 25, 2019, HHS released a final rule that officially withdraws the HPID requirement. Due to this development, health plans are not required to obtain HPIDs and the HPID is not required to be used in HIPAA standard transactions. The health care industry may continue to use its own standard payer identifier in these transactions.

For more information on this development, click here.

New Law Took Effect July 28

Last May, Washington adopted a new law requiring employers to display a poster about domestic violence. The poster was published recently by the Washington Employment Security Department (ESD) and it includes instructions employees can follow to contact help if they are dealing with a domestic violence situation. The poster also includes some blank space employers can use to add information about local resources. 

Employers will need to display this poster in a conspicuous place where other workplace posters are displayed. Click here to access the domestic violence poster and other posters published by the the ESD.

Proposal Does Not Apply to Group Health Plans

On Oct. 23, 2019, the U.S. Department of Labor (DOL) published a proposed rule that would allow plan administrators to make retirement plan disclosures available on a website.

The safe harbor would be permitted for employee pension benefit plan disclosures, such as summary annual reports or pension benefit statements, but not for any document that must be furnished upon request. The proposal would not apply to employee welfare benefit plans, such as group health plans or plans providing disability benefits.

If the proposal is adopted, plan administrators may continue to use the existing safe harbor for electronic delivery, or to furnish paper documents by hand-delivery or mail. The proposal would provide a new, optional method where plan administrators who satisfy specified conditions may furnish documents electronically, unless participants affirmatively opt out.

Click here for more information on the proposal.

New Rate Takes Effect on Jan. 1

Florida has announced that the state’s minimum wage rate will increase from $8.46 per hour to $8.56 per hour on Jan. 1, 2020. Similarly, the minimum wage rate for tipped employees will increase from $5.44 to $5.54 per hour. 

This 10-cent increase has been approved to adjust the state’s minimum wage for inflation. A new minimum wage poster and other information about Florida’s minimum wage rates is also available here.

New Law Takes Effect Jan. 1

On Oct. 10, 2019, California adopted a new law that strengthens lactation accommodation protections for employees. The new law becomes effective on Jan. 1, 2020 and is similar to San Francisco’s lactation accommodation law. 

In addition to current lactation accommodations, the new law requires employers to provide a private lactation room that: 

• Is safe, clean and free from hazardous materials;
• Contains a surface for a breast pump and personal items;
• Contains a place to sit; and
• Has access to electricity or alternative devices (extension cords, charging stations) needed to operate breast pumps.

The lactation room may not be a bathroom.

Also beginning Jan. 1, 2020, employers must provide lactating employees with access to a sink with running water and a suitable place for storing expressed milk, such as a refrigerator. Water and storage access must be in proximity to the employee’s workspace. 

Employers with fewer than 50 employees may be exempt from one of the requirements listed above if they can prove that providing the accommodation would cause them significant difficulty or expense in relation to the size, financial resources, nature or structure of the employers’ business. 

Employers must implement a lactation policy and include it in their employee handbook or other set of policies made available to employees. The policy must be distributed to new employees upon hiring and when an employee asks about or requests parental leave.

Click here for more information about lactation accommodations.

New Rate Becomes Effective Jan. 1

On Oct. 7, 2019, the South Dakota Department of Labor and Regulation announced that the state minimum wage rate will increase from $9.10 per hour ($4.55 per hour for tipped employees) to $9.30 per hour ($4.65 per hour for tipped employees). The new rate becomes effective on Jan. 1, 2020. 

The state’s minimum wage rate is adjusted every year to reflect changes in the cost of living, measured by the U.S. Department of Labor Consumer Price Index. 

Click here for additional information on South Dakota’s wage laws.

New Rate Becomes Effective Jan. 1

On Oct. 7, 2019, the Vermont Department of Labor announced that the state minimum wage rate will increase from $10.78 ($5.39 per hour for tipped employees) to $10.96 per hour ($5.48 per hour for tipped employees). The new rate becomes effective on Jan. 1, 2020. 

The 18-cent increase is the result of an annual adjustment the state makes to account for inflation. The state minimum wage rate for tipped employees is traditionally 50 percent of the full minimum wage rate.

Comment Period for Proposed Rule Ends Dec. 9

On Oct. 8, 2019, the U.S. Department of Labor (DOL) published a proposed rule to amend employee tip regulations under the Fair Labor Standards Act. This proposed rule has been issued, in part, to bring the regulations into alignment with legislation approved by Congress in 2018 and to incorporate DOL guidance about tipped wages. 

Among other things, the proposed rule would:  

• Prohibit employers (including managers and supervisors) from keeping employee tips;
• Permit non-tipped employees to share in the tip pool, if their employer does not use the tip credit; and
• Allow employers to use the tip credit when paying tipped employees for non-tipped activities that are “contemporaneously” performed with tipped activities. 

Some expect the proposed rule will “provide employers greater flexibility in determining pay practices for tipped and non-tipped workers.” These individuals also expect that the proposed rule “may allow for a reduction in wage disparities among employees who contribute to the customers’ experience.”

Click here for more information.

New Rate Becomes Effective Jan. 1 

On Sep. 30, 2019, the Montana Department of Labor and Industry announced that the state minimum wage rate will increase from $8.50 to $8.65 per hour. The new rate becomes effective on Jan. 1, 2020. 

The 15-cent increase is the result of an annual adjustment the state makes to account for changes in inflation. 

Click here for additional information on Montana’s minimum wage.

New Rate Becomes Effective on Jan. 1

Ohio has announced a new minimum wage rate of $8.70 per hour for nonexempt employees. The state minimum wage rate applies to employers that gross $319,000 per year or more. The 2020 wage for tipped employees is $4.35 per hour.

Employers that gross less than $319,00 per year must pay their employees at least the federal minimum wage rate of $7.25 per hour. The federal minimum wage rate also applies to employees under the age of 16. 

The Ohio Department of Commerce has already published the 2020 minimum wage poster employers must display in their workplace.

New Rate Becomes Effective on Jan. 1

The state of Alaska has announced a minimum wage rate of $10.19 per hour for 2020. The minimum wage in the state is adjusted annually using the Consumer Price Index for urban consumers in the Anchorage metropolitan area for the preceding calendar year. 

Click here for more information about Alaska's wage laws. 

New Law Becomes Effective Jan. 1

California has adopted a new law that changes the process for determining whether a worker should be classified as an employee or independent contractor. The new law sets the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles as the state standard for employee classification and expands its scope to include classification related to the state’s labor code, wage orders, unemployment benefits and workers’ compensation laws. 

Under the new standard, also known as the ABC test, a worker is an employee if he or she provides labor or services for remuneration. The new law also shifts responsibility to employers to prove that independent contractors are classified correctly. Under the ABC test, a worker is an employee, unless the employer can prove that the worker:

A: Is free from the control and direction of the employer when performing work, both practically and in the contractual agreement between the parties;
B: Performs work that is outside the usual course of the employer’s business; and
C: Is culturally engaged in an independently established trade, occupation or business of the same nature as the work performed for the employer.

Finally, the new law does not diminish the flexibility of part-time or intermittent work schedules, nor the ability to work for multiple employers, but it does prohibit employers from reclassifying individuals who were employees on Jan. 1, 2019 as independent contractors.