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APS July 2018 Compliance Updates
APS reports on relevant, impactful compliance updates each month to help keep you at the top of your compliance game. This month we are seeing the release of state unemployment wage bases, state withholding tables and methods changes, and extended tax filing deadlines. Here are your July compliance updates:
IRS TO RELEASE FINAL 2019 FORM W-4 IN NOVEMBER
The IRS announced that in early November they will be releasing a final version of the 2019 Form W-4, Employee’s Withholding Allowance Certificate. Another draft will be released in mid-August before the final form is issued. The W-4 was revised to reflect changes to the federal tax code (Pub. L. 115-97.) Draft forms are not final forms and are not to be filed by taxpayers.
LABOR BOARD SHIFTS TONE ON JOINT EMPLOYER RULE IN COURT
On July 3rd, the National Labor Relations Board (NLRB) took a cautious tone in a federal court hearing on its plans to issue a rule on joint employment. An NLRB attorney, Ruth Burdick told federal appeals that the court shouldn’t wait for the NLRB to release a proposal for a regulation to clarify joint employer liability for businesses this summer.
The shift in tone highlights the uncertainty over the issue when one business can be held responsible for workplace law violations against employees at a different business. How the board sorts out the joint employment issue could affect businesses, workers in franchise and other contract business relationships.
LABOR DEPT. STILL DOUBLING DOWN ON MOST WAGE SETTLEMENTS
The wage enforcement policy to charge businesses double the back pay owed to workers has survived the Trump administration’s business-friendly makeover. In April, the Labor Division launched an initiative to let businesses self-report wage violations to the Department of Labor in exchange for a release of private claims.
The agency assured that businesses that reported their back wage liability and are accepted in the program won’t need to pay double damages. Employers are hopeful that the federal government will ease this approach.
CALIFORNIA MINIMUM WAGE
The Anaheim City Council voted to place a measure on the November ballot to raise the hourly minimum wage for hospitality workers who are employed by companies that receive economic aid from the city. This measure would raise to $15 an hour on January 1, 2019, and increase by $1 each January 1 until 2022. At this point, the hourly minimum wage would increase at the greater of 2 percent or the inflation-related adjustment to the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Los Angeles Metropolitan Area.
DELAWARE MINIMUM WAGE, YOUTH WAGE
Delaware’s hourly minimum wage is to increase and training and youth wages were established on July 1 by Governor John Carney. Under S.B. 170, the state’s minimum wage is to rise from $8.25 to &8.5 on January 1, 2019. The wage is to increase again to $9.25 on October 1, 2019. However, the date of the first increase is subject to change as it’s under review and a final determination by a legislative counsel.
The second measure, H.B. 483, determines that employees who are at least 18 during the first 90 consecutive days of work may be paid a training minimum wage of at least $8.25 an hour starting January 1, 2019. Employees younger than 18 may be paid a youth wage at least $8.25, effective January 1, 2019.
WILMETTE, ILLINOIS LOCAL MINIMUM WAGE
The Wilmette measure (2018-O-45) will require employers to adopt the Cook County hourly minimum ordinance which took effect on October 26, 2016. The Cook County minimum wage ordinance annually raises the hourly minimum wage until it reaches $13 on July 1, 2020, and will be adjusted each year based on inflation. Wilmette employers will now have to pay $11 an hour for minimum wage and $5.10 minimum cash wage for tipped employees starting on October 1, 2018 to match the increases that went into effect for Cook County on July 1, 2018.
The Wilmette measure readopting the Cook County minimum wage ordinance is not to apply retroactively; it is also to be revoked at the earlier of the state raising its hourly minimum wage or Cook County amending its ordinance or creating a new such ordinance. If neither event has occurred, the village of Wilmette ordinance is to be repealed and revert to the Illinois hourly minimum wage when the Cook County minimum wage adjusts for inflation on July 1, 2021.
The village of Wilmette will continue to opt out of the Cook County paid sick leave ordinance which requires employers to provide one hour of sick leave for every 40 hours worked by employees who work at least 80 hours.
MAINE UNEMPLOYMENT INSURANCE
Starting in November, all employers must adopt the new ReEmployME portal is to file Form ME UC-1 and for making payments for employers who now file and pay through the Maine Revenue Services electronic portals. All Forms ME US-1 and payments are to be submitted to Revenue Service in October; however, the ReEmployME portal is to open for new employer registration in August.
Maine employers are usually required to file Forms ME UC-1 electronically unless requesting a waiver. However, employers filing paper forms may still do so after the ReEmployME portal is released and should continue to submit the paper forms and payments to Revenue services. Also, employers using the Maine EZ Pay system to make unemployment tax payments must complete the transaction the day it’s initiated, effective July 2, 2018.
MINNESOTA STATE TAX EXTENSION
The Minnesota Revenue Department gave the victims of recent storms and floods a filing and payment deadline extension. Any person or business in the affected areas with Minnesota tax returns or payments due from June 9 to July 31, 2018, is covered by the extension.
NEW HAMPSHIRE WAGE AND HOUR UPDATES
Governor Chris Sununu signed S.B. 318 on June 25, 2018 which allows 16- and 17-year-olds to work longer hours during a school week. The hours that 16- and 17-year-olds may now work have been increased to no more than 40.25 hours during four-day school weeks; during school weeks of fewer than four school days, the hours they can work have increased to no more than 48 hours. The bill took effect on June 25, 2018.
NEW YORK RELEASES EMPLOYER COMPENSATION EXPENSE PROGRAM (ECEP) UPDATE
Employers will make an annual affirmative election to participate in the ECEP no later than December 1 to pay the options tax in the following calendar year. Initial elections must be made no later than December 1, 2018. The state will be providing a web-based registration system for the employer to enter elections. If employers elect to participate in the ECEP, they should communicate to employees:
- That you are making the election for the year.
- If they make over $40,000, they may be eligible for a tax credit when filing their income tax return. They should review their IT-2104, Employee’s Withholding Allowance Certificate to adjust their withholding.
- The amount of wages subject to ECET for the year.
The state of New York wasn’t planning on update its withholding tables to accommodate the payroll tax, but the state Form IT-2104 is to be updated to let employees adjust their withholding if the employer decides to pay the payroll tax.
When and How to File and Pay:
The ECET will be paid on the same date of your withholding tax payments. The quarterly returns are due on the same dates of an employer’s withholding tax returns. Should a due date fall on a weekend or legal holiday, employers may report and pay on the next business day. Here are the quarters and due dates:
Even though the ECET return and payments are due at the same time as an employer’s withholding tax, they must file and pay the taxes separately. Employers must file all quarterly ECET returns and payments online.
PAID LEAVE LAWS COMPLIANCE ADJUSTMENTS
As states, cities and counties mandate paid sick leave, employers are starting to reevaluate their paid leave packages. This is causing some of those employers to turn away popular paid time-off banks.
Ten states, 31 cities, to counties, plus the District of Columbia and Puerto Rico have compliance laws which require employers to provide a certain amount of paid sick leave to workers. However, employers operating in multiple jurisdictions may have a hard time staying compliant with paid leave requirements.
FILING RATE OF EMPLOYMENT FORMS STILL LESS THAN 50%
The Electronic Tax Administration Advisory Committee’s “Annual Report to Congress” that was submitted in June revealed reasons why the form series (Form 94x) that makes up the second-largest number of tax returns filed has the lowest e-filing rate of 41.4%. The report concluded that the process for enrollment and the e-signature requirement for electronically filing 94x payroll forms are complex and cumbersome to navigate. The ETAAC suggested that the Internal Service Revenue simplifies its administrative processes if it wants to boost the e-filing rate for the Form 94x series.
ARKANSAS MINIMUM WAGE
More than the required number of signatures needed to put the Arkansas Minimum Wage Increase Initiative on the November 6 election ballot were submitted to the secretary of state’s office earlier this month. The secretary of state’s office has until August 23, 2018 to certify that at least 67,887 of the signatures are valid for the proposal to appear on the ballot. Should the Initiative pass in November, the hourly minimum wage would increase from $8.50 to $9.25 on January 1, 2019, followed by increases to $10 in 2020 and $11 in 2021.
DISTRICT OF COLUMBIA TIPPED WAGES
The Council of the District of Columbia introduced a bill to repeal Initiative 77 on July 10, which would have eliminated the tipped wage. The Initiative was approved by voters on June 19, and would raise the direct minimum cash wage that tipped workers must receive to $15 by 2025, after which would continue to raise until it is the same as D.C’s hourly minimum wage. The first increase, which would have raised the tipped workers’ direct cash wage to $4.50, was supposed to take effect on July 1; however, the measure is subject to a 30-day congressional review, which must conclude before the measure’s provisions can take effect.
HAWAII FILING DEADLINE
The filing deadline for employment tax returns was extended for Hawaii victims of severe storms, flooding, landslides, and mudslides that occurred on April 23, 2018. According to Notice HI-2018-03, employers with operations in declared federal disaster areas have until August 15, 2018, to file employment tax returns. Employment taxes must still be deposited by employers in the covered disaster areas by this date.
Electronic Filings Now Required For Hawaiian Employers
On June 29, the bill H.B. 2395 was signed into law. The bill now requires electronic filing of withholding returns by Hawaiian employers who withhold at least $40,000 in a year. There will be a penalty of 2 percent of the tax required to be shown on the return if an employer required to electronically file failed to do so. The state’s tax department is required to give 90 days’ notice before any electronic filing requirement takes effect. There is no set date for the e-filings to start.
IOWA UNEMPLOYMENT TAXABLE WAGE BASE
Iowa’s UI taxable wage base is to increase from $29,900 to $30,6000 starting on January 1, 2019.
Iowa’s Jobless and Injury Benefits Increase
On July 1, 2018, the maximum weekly benefits paid to jobless Iowans and to workers injured on the job increased, which has triggered the rise in benefits. The average annual wage for insured Iowa workers increased from $44,722.93 in 2016 to $45,877.31 in 2017. The new benefit payment schedules will apply to those who filed new unemployment insurance claims on or after July 1, 2018 and to workers injured on or after July 1, 2018.
Also beginning July 1, 2018, the worker’s compensation maximum weekly benefit for temporary total disability, healing period, permanent total disability and death will rise to $1,765. For permanent partial disability, the weekly maximum is $1,623.
MASSACHUSETTS MINIMUM WAGE AND PAID LEAVE
Massachusetts governor Charlie Baker signed measure H. 4640, which will increase the state’s hourly minimum wage from $11 to $15, and the tipped-worker wage from $.375 to $6.75 by 2023. The bill eliminates time and one-half pay for work on Sunday, Memorial Day, Independence Day, and Labor Day.
The bill will also institute a program for paid family and medical leave. Workers who contribute to the program to take up to 12 weeks of leave in a year to care for a sick family member or bond with a newborn, up to 20 weeks for care for their own medical needs, and up to 26 weeks to address emergencies related to a family member’s military deployment. The program’s benefits are to be calculated as a percentage of the employee’s average weekly wage, up to a weekly maximum of $850. Self-employed workers may also opt into the program.
The Department of Family and Medical Leave is to publish by March 31, 2019, proposed regulations to establish procedures to collect contributions and to file and timely process benefits claims.
NEVADA UNEMPLOYMENT TAX FILING
Starting July 1, 2018, Nevada employers will be required to electronically file unemployment tax and wage reports. Employers may request a one-year waiver from the Nevada Department of Employment, Training and Rehabilitation should the employer demonstrate lack of resources to file electronically, economic hardship, or any other good cause.
NEW JERSEY INCOME TAX BRACKET INCREASES
New Jersey introduces a new bill (A. 3088) on July 1, 2018. The bill introduced an income tax rate of 10.75 percent for incomes exceeding $5 million, effective for the 2018 tax year. However, the bill will direct taxes to be withheld from incomes exceeding $5 million at a rate of 15.6 percent for the rest of 2018.
Employers are to implement the higher withholding rate as soon as possible, but before September 1, 2018. Employers are not subject to the interest of penalties for under-withholding made before September 1 attributable to the new tax rate.
OHIO WORKERS’ COMPENSATION PAYROLL TAX
The Ohio workers’ compensation payroll assessments for the state’s disabled workers relief funds are not to be in effect from July 1, 2018, to June 30, 2019. The state’s second disabled workers’ relief fund provides funds to workers with a permanent total disability because of on-the-job injury or illness that occurred on January 1, 1987, or later. When the tax is in effect, private employers pay assessments semiannually on their gross payrolls for the preceded six months.
RHODE ISLAND ELECTRONIC WAGE RECORDS
On June 28th, 2018 Gov. Gina Raimondo signed the (H. 7800 Sub Aaa/S. 2597 Sub Aaa) measures to possible allow wages statements and records that are furnished to employees may be provided electronically. Employees may also be able to request that employers furnish printed or written records instead of electronic records.
VERMONT INCOME TAX RATES
Vermont’s fiscal 2019 budget (H. 16) passed on June 25th included Vermont’s income tax rates that were adjusted effective for tax year 2018. The measure decreased the number of state income tax brackets from four to five by decreased the three lower rates by .2% and combining the top two rates into one bracket of 8.75%. The new tax rates are 3.35, 6.60, 7.60, and 8.75%. The bill also established a state personal exemption of $4,150 and a standard deduction of $6,000 for 2018.
WYOMING UNEMPLOYMENT TAXABLE WAGE BASE
Wyoming’s unemployment taxable wage base is to increase from $24,700 to $25,400 starting January 1, 2019.
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