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November, 2019

November 2019 Compliance Updates

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November 2019 Compliance Updates

APS reports on relevant, impactful compliance updates each month to help keep you at the top of your compliance game. Updates this month include potential new overtime calculation factors, withholding methods and tables, and inflation-adjusted payroll amounts. Here are your November compliance updates:

Tax Transcripts

DOL Releases Proposal Regarding Overtime Calculation Factors

Under a Labor Department proposal that appeared in the Federal Register on November 5, 2019, employers could include bonuses and other incentive-based pay when calculating overtime for workers with fluctuating workweeks. The deadline to comment on the proposal is December 5, 2019.

According to the proposed rule; bonuses, premium payments, and other incentive-based pay received by workers whose hours fluctuate must be included when employers calculate their regular pay rate under the Fair Labor Standards Act. Guidance on the submission of comments appears in the proposal. The proposal also includes examples of the proposed fluctuating-workweek method of calculating overtime when employees receive a night-shift differential and a productivity bonus.

Here is the upcoming schedule regarding the proposal:

  • A final rule to update regular-rate requirements under the FLSA, to identify the amounts to include in overtime calculations, are expected within the month.
  • A final rule addressing joint-employer status is expected in December.
  • A final rule addressing electronic payment penalties is expected in March 2020.
Minimum Wage Changes

Child Support Office Updates National Medical Support Notice

Part A of an updated National Medical Support Notice was issued on October 30, 2019, by the Office of Child Support Enforcement. The two-part notice enforces the health-care coverage provision of child-support orders. Part A, along with Part B of the notice, offers employers and plan administrators details about those covered by the order, including withholding and enrollment requirements. Part B is expected to be issued soon at the office’s website.

Wage Bases

EEOC Holds Hearing on Ending Gender and Race Pay Reporting

The Equal Employment Opportunity Commission (EEOC) hosted a public hearing on November 20, 2019, to announce its decision to end the collection of pay data from employers. On September 11, 2019, the agency announced that it doesn’t intend to collect pay data for future reports from employers with 100 or more workers. However, the EEOC intends to continue collecting workforce data broken down by race, sex, and ethnicity.

Employers are turning over employee pay data this year after worker advocates sued the EEOC and the White House’s Office of Management and Budget in 2017 for staying the data collection. A federal judge reinstated the pay data portion of the report in March, requiring employers to turn over the fiscal year 2017 and 2018 pay data by September 30, 2019. That deadline has since been extended, and the pay data collection could possibly be open until January 31, 2020.

Minimum Wage

IRS Issues 3rd Draft of 2020 Income-Withholding Instructions

On November 4, 2019, a third early release draft of income withholding instructions for 2020 was released by the Internal Revenue Service (IRS). Publication 15-T addresses additional topics not included in the first two drafts that were issued by the agency in May and August. The 24-page publication, which was expanded from the previous draft’s 18 pages, added two sections: “Alternative Methods for Figuring Withholding” and “Tables for Withholding on Distributions of Indian Gaming Profits to Tribal Members.”

The latest draft also includes withholding guidance regarding periodic payments of pensions and annuities and new employees who fail to submit Forms W-4, Employee’s Withholding Certificate. Draft publications are not final and may be updated. The IRS said a final version of Publication 15-T is expected in December and would include dollar amounts that cannot be calculated before late November. According to the IRS, substantive changes to the percentage or wage-bracket methods are likely.

Tax Rates

IRS Releases 2019 Form 944, Annual Tax Return for Employers

On October 24, 2019, the IRS released the 2019 Form 944, Employer’s Annual Federal Tax Return, along with instructions on how to complete the form. It is mostly unchanged from the 2018 version.

For tax years starting January 1, 2016, and later, a qualified small business may elect to claim up to $250,000 of its credit for increasing research activities as a payroll tax credit against the employer share of Social Security tax. The first Form 944 to claim the credit was Form 944 filed for the tax year 2017.

Minimum Wage Changes

IRS Releases 2019 Draft Forms for ACA Health-Care Coverage

Draft versions of 2019 employer forms for the Affordable Care Act were released on November 13, 2020, by the IRS. The drafts include:

Instructions for the B and C series of forms were also released. The forms were revised for 2019 with minimal changes, most of which were to revise dates and website links. Draft forms are not final and are not to be filed by taxpayers. IRS officials have said additional guidance may be released before the end of the year.

Unemployment Tax Rates

IRS Releases 2019 Instructions for Qualified Adoption Expenses

On November 10, 2019, the IRS released instructions for qualified adoption expenses. The instructions are to be used to complete Form 8839.

These instructions include the maximum credit and the exclusion figures adjusted for inflation. Employers can exclude any payments for substantiated and qualified adoption expenses for eligible children made under an adoption assistance program from employee income. Form 8839 should be used to calculate the adoption credit and any employer-provided adoption benefits that can be excluded from employee income.

The 2019 maximum credit and the exclusion for employer-provided benefits both are $14,080 for each eligible child.

Massachusetts

IRS Releases 2019 Tax Return for Agricultural Employees

On October 24, 2019, the IRS released instructions for completing the annual tax return for agricultural employees. The accompanying Form 943 was mostly unchanged from the 2018 version.

For tax years starting January 1, 2016, and later, a qualified small business may elect to claim up to $250,000 of its credit for increasing research activities as a payroll tax credit against the employer share of Social Security tax. The credit is reported on Form 8974, Qualified Small Business Payroll Tax Credit for Increasing Research Activities.

Massachusetts

IRS Releases 2020 Inflation-Adjusted Payroll Amounts

On November 6, 2019, the IRS released its 2020 adjustments to tax-related amounts. The monthly limit for the qualified transportation fringe benefit and for qualified parking is to increase to $270 from $265. Payroll-related provisions that are to be applied in 2020 include:

  • The exempt amount of wages, salary, or other income to apply to tax levies for years when the personal exemption amount is zero is $4,300, up from $4,200 in 2019.
  • The standard deduction for married filing jointly is to increase to $24,800 from $24,400; for single taxpayers and married individuals filing separately to $12,400 from $12,200, and for heads of households to $18,650 from $18,350.
  • Some penalty amounts for failing to file tax returns and deposit taxes. The general-rule penalty is $280 for each incorrect form, with an annual maximum of $3,392,000. If the form is corrected within 30 days, the penalty is $50 for each return, with a maximum of $565,000 for the year. If the form is corrected after 30 days but by August 1, the penalty is $110 for each form, with an annual maximum of $1,696,000. The maximum penalties are lower for employers with three-year average gross receipts of up to $5 million.

For more information on 2020 tax provisions, please visit our Payroll Taxes: Rates and Changes page.

Oregon

IRS to End Publication of Early-Release Withholding Tables

The IRS is announced on November 7, 2019, their plans to discontinue their early-release publication of the federal percentage method withholding tables, in favor of posting the tables on the agency’s website. Each year’s percentage method withholding tables had been included in Notice 1036 before their inclusion in Publication 15 (Circular E), Employer’s Tax Guide, and Notice 1036 will no longer be published.

The third draft of Publication 15-T, Federal Income Tax Withholding, was released on November 4, 2019. It was expanded to include alternative withholding methods. During the agency’s monthly payroll-industry teleconference, guidance was requested regarding two issues:

  • The cumulative-wage instructions reference the annualized withholding tables from the automated percentage method. Because the instructions calculate withholding on average wages per pay period, the instructions may instead need to refer to the pay-period tables in the publication’s other methods in order to allow for cumulative withholding for pay periods shorter than one year.
  • The alternative withholding methods do not detail how to include in calculations the annual amounts reported in Steps 3, 4a, and 4b of the 2020 Form W-4.

According to IRS officials, they are to review these issues accordingly.

Oregon

Pension Plan Amounts Rising in 2020

On November 6, 2019; 2020 employee contribution limits for Section 401(k), 403(b), and most 457 plans are to rise to $19,500 from $19,000. According to Notice 2019-59 released by the IRS, the catch-up contribution limit for 2020 is to be $6,500, up from $6,000 in 2019. This limit applies to employees 50 and older who participate in the plans.

Other limits that are expected to increase in 2020 are:

  • Elective contributions limit per employee to a savings incentive match plan for employees, also known as a SIMPLE plan, which is structured as an individual retirement account: $13,500, up from $13,000.
  • Maximum annual addition under Internal Revenue Code Section 415(c)(1)(A) for defined-contribution plans: $57,000, up from $56,000
  • Compensation limit used in defining a highly compensated employee: $130,000, up from $125,000.
  • Annual compensation limit for qualified plans: $285,000, up from $280,000.
  • Dollar limit of a key employee in a top-heavy plan: $185,000, up from $180,000.
  • Compensation limit of a control employee for fringe-benefit valuation purposes: $115,000, up from $110,000.

According to the IRS, the compensation amount under I.R.C. Section 408(k)(2)(C) pertaining to simplified employee pensions, also known as SEPs, is to remain $600 for 2020.

Oregon

New Fact Sheets Focus on White-Collar Overtime Rule Elements

On October 29, 2019, two fact sheets on nondiscretionary bonuses and special salary levels for U.S. territories were issued for use under the new white-collar overtime exemption rule that will take effect on January 1, 2020. The fact sheets are available on the DOL’s website.

Kentucky

Outstanding Tax Issues May Prompt In-Person Visit from the IRS

Those who have ongoing tax issues, such as missing returns or unpaid liabilities, may soon receive an in-person visit from the IRS. The new targeted approach to the agency’s face-to-face visits will focus on businesses that haven’t paid taxes withheld from their employees’ wages. There will be some individual cases that merit a house call, but those will mostly be high-dollar complex cases. The effort is part of a larger push within the IRS’ Small Business/Self-Employed division to improve enforcement and collection while also better educating taxpayers. During the visits, revenue officers will educate taxpayers on tax laws and provide them with information on compliance. The meetings will also serve as a way for the IRS to gather financial information it is missing through interviews.

The agency is focusing the in-person meetings on areas where there have been a limited number of revenue officers due to declining IRS resources. The IRS is sending about a dozen revenue officers each time it visits a new geographic area. The IRS plans to go to all areas where resource constraints have reduced the agency’s presence and taxpayers have significant tax issues.

Connecticut

2019 FUTA Credit Reduction States

U.S. Virgin Islands

The Labor Department announced on November 12, 2019, that employers in the U.S. Virgin Islands are to pay higher payroll costs for 2019 because of a Federal Unemployment Tax Act credit reduction. A FUTA credit reduction is to apply to the U.S. Virgin Islands because the jurisdiction had a loan balance from the federal unemployment account and was assessed a credit reduction for 2018.

For more information, please visit our FUTA resource page.

Oregon

Rule Allows Electronic Payment of Wage, Hour Penalties

According to a final rule that appeared in the federal register on November 7, 2019, penalties may be paid electronically for Fair Labor Standards Act wage and hour violations. The rule, which took effect with its subsequent publication, improves upon the current policy of paying penalties to the Labor Department by certified check, money order, or in person. Under the rule, penalties may be paid by “an electronic payment alternative, any successor system, or by any additional payment method that the department may deem acceptable in the future.”

Payments may be made through Pay.gov, a web portal for secure transactions sponsored by the Treasury Department. Other electronic methods may be used to pay penalties, with department approval. The new method rule aims to simplify payments of penalties. Penalties may also be paid electronically for violations issued under the Migrant and Seasonal Agricultural Worker Protection Act, the H-2A provisions of the Immigration and Nationality Act, and the Employee Polygraph Protection Act. Those who wish to continue to pay penalties by certified check or money order are to do so based on instructions provided by the Wage and Hour Division during the resolution of a Wage and Hour investigation.

Oregon

2020 State Tax Underpayment Information

  • Maine’s interest rate for tax underpayments is 7% for 2020, up from 6% for 2019 and 2018.
  • Maryland’s interest rate on tax underpayments is to be 10.5% for 2020, down from 11% for 2019.
  • Missouri’s interest rate for tax underpayments is 5% for 2020, unchanged from 2019.
  • New York’s interest rates on tax underpayments are 9% for withholding and 7.5% for the Metropolitan Commuter Mobility Transportation Tax for the first quarter of 2020, unchanged from the fourth quarter of 2019.
  • West Virginia’s interest rate for tax underpayments is to decrease to 9.25% for 2020, down from 9.75% for 2019.
Minnesota

2020 State Unemployment Tax Rates

Arkansas’ 2020 Unemployment Tax Rates

  • The rate of Arkansas’ fund-stabilization surtax, which is added to employers’ basic tax rates, is to be 0.02% in 2020, down from 0.3% in 2019.
  • Basic unemployment tax rates are unchanged for 2020, but the lower surtax rate is to decrease total tax rates assigned to employers.
  • Total tax rates for experienced employers are to range from 0.12% to 6.02% in 2020, compared with 0.4% to 6.3% in 2019.
  • The maximum tax rate for negative-rated employers assessed an additional contribution is to be 14.02%, down from 14.3%.
  • The tax rate for new employers is to be 2.92% in 2020, down from 3.2% in 2019.

Colorado 2020 Unemployment Tax Rates

  • Effective January 1, 2020, tax rates for experienced employers are to range from 0.58% to 3.17% for positive-rated employers;
  • 4.06% to 7.40% for negative-rated employers.
  • For 2019, tax rates for experienced employers range from 0.62% to 8.15%.
  • The standard tax rate for new employers is to be 1.7% in 2020, unchanged from 2019.
  • The 2020 tax rate for new construction of buildings (Code 236) employers and for new specialty trade contracting (Code 238) employers is to be 1.61%, down from 1.77% in 2019.
  • The 2020 tax rate for new heavy and civil engineering construction (Code 237) employers is to be 5.94%, down from 7.43% in 2019.

Idaho’s 2020 Unemployment Tax Rates

  • Effective January 1, 2020, unemployment tax rates for experienced employers are to range from 0.255% to 0.849% for positive rated employers; 1.527% to 5.4% for negative-rated employers.
  • Tax rates for 2019 range from 0.251% to 0.836% for positive-rated employers; 1.505% to 5.4% for negative-rated employers.
  • The 2020 tax rates for experienced employers that have not been assessed the maximum rate are to include a workforce development training-fund surtax that ranges from 0.00765% to 0.07128%.
  • The unemployment tax rate for new employers is to be 1% for 2020, unchanged from 2019.

Maryland’s 2020 Unemployment Tax Rates

  • Effective January 1, 2020, unchanged from 2019, unemployment tax rates for experienced employers are to be determined with Table A and range from 0.3% to 7.5%.
  • The standard tax rate for new employers is to be 2.6% in 2020, unchanged from 2019.
  • The 2020 tax rate for new construction employers with headquarters in another state is to be 4.5%, down from 4.8% for 2019.

Ohio’s 2020 Unemployment Tax Rates

  • Unemployment tax rates for experienced employers are to range from 0.3% to 6.8% for positive-rated employers; 7% to 9.4% for negative-rated employers.
  • Ohio’s unemployment tax rate for delinquent experienced employers for 2020 is to be 11.8%, up from 11.5% for 2019.
  • The standard tax rate for new employers is to be 2.7% for 2020, unchanged from 2019.
  • New employers in the construction industry are to be assessed at a rate of 5.8% in 2020, down from 5.9% in 2019.
  • A mutualized tax is not to be in effect for 2020, unchanged from 2019.
  • Ohio’s unemployment-taxable wage base is to be $9,000 for 2020, down from $9,500 in 2019, as predetermined by state law.

South Carolina’s 2020 Unemployment Tax Rates

  • Effective January 1, 2020, a solvency surcharge is not to be in effect, causing tax rates to be lower for 2020 than in 2019.
  • Total tax rates for experienced employers not assigned the maximum tax rate are to range from 0.06% to 2.091%, including base rates ranging from zero to 2.031% and an administrative assessment of 0.06%.
  • Total tax rates for such employers in 2019 range from 0.06% to 3.064%.
  • The maximum tax rate for experienced employers is to be 5.46% in 2020, unchanged from 2019.
  • The unemployment tax rate for new employers equals the rate for experienced employers assigned to Rate Class 12, which is to be 0.55%, down from 0.87% for 2019. The rate includes a base rate of 0.49% and an administrative assessment of 0.06%.
New York

2020 State Unemployment Wage Bases

The following states have new unemployment wage bases for 2020:

  • Colorado - $13,600; up from $13,100 in 2019.
  • Iowa - $31,600; up from $30,600 in 2019.
  • Kentucky - $10,800; up from $10,500 in 2019.
  • Nevada - $32,500; up from $31,200 in 2019.
  • New Jersey - $35,300; up from $34,400 in 2019.
  • New Mexico - $25,800; up from $24,800 in 2019.
  • New York - $11,600; up from $11,400 in 2019.
  • Oklahoma - $18,700; up from $18,100 in 2019.
  • Oregon - $42,100; up from $40,600 in 2019.
  • Vermont - $16,100; up from $15,600 in 2019.
  • Washington - $52,700; up from 49,800 in 2019.
  • Wyoming - $26,400; up from $25,400 in 2019.

The following states have unchanged wage bases for 2020:

  • Maryland - $8,500.
  • South Carolina - $14,000.

For more information, please visit our SUTA resource page.

Minnesota

2019-2020 State Electronic Filing Rules

Connecticut

Connecticut’s filing specifications for 2019 Forms W-2 and Forms 1099 were released November 5 by the state Department of Revenue Services. Employers filing at least 25 Forms W-2 or Forms 1099 must file electronically, the department said.

Kansas

Kansas’ filing specifications for 2019 Forms W-2 and 1099 were released by the state revenue department. Employers with more than 50 employees are required to file electronically, the department said.

Maryland

Maryland’s 2019 Form W-2 and 1099 filing specifications were released November 6 by the state comptroller’s office. Employers filing at least 25 Forms W-2 or Forms 1099 must file electronically.

Ohio

On October 30, 2019, Ohio’s filing specifications for 2019 Forms W-2 were released by the state tax department. Employers may now file Forms W-2 online using the Ohio Business Gateway portal. Employers filing at least 250 Forms W-2 are required to file online. In previous years, Ohio required employers filing at least 250 Forms W-2 to file using CD-ROMs.

On November 8, 2019, Ohio’s filing specifications for 2019 Forms 1099-R were released by the state taxation department. Online filing is not yet available for Forms 1099-R. Employers filing at least 250 Forms 1099-R must file on CD-ROM.

Pennsylvania

On November 8, 2019, Pennsylvania’s filing specifications for 2019 Forms W-2 and 1099 were released by the state revenue department. The department released specifications for the EFW2 format, which may be used only to file Forms W-2, and the comma-separated values format, which may be used to file both Forms W-2 and Forms 1099. Employers filing at least 10 Forms W-2 must file electronically.

Vermont

Vermont’s filing specifications for 2019 Forms W-2 and 1099 were released by the state tax department. Employers must file electronically if they are filing more than 25 forms and all payroll service providers must file electronically.

West Virginia

Final West Virginia filing specifications for Forms 1099 were released on October 31, 2019, by the state tax department. Employers filing at least 25 forms or that use a payroll service provider are required to file electronically.

New York

2020 State Withholding Tables and Methods

Kentucky

Electronic Payment Withholding Proposal

Proposed changes to a Kentucky rule would require larger employers to file withholding returns and make payments electronically starting in 2021, while all employers would be required to do so starting in 2022. The proposal, which was published on November 1, 2019, in the Administrative Register of Kentucky, would require semimonthly and monthly filers to file and pay electronically, effective January 1, 2021.

Together, semimonthly and monthly filers are all Kentucky employers that withheld at least $2,000 in the previous year. The proposal would require all employers to file and pay electronically, effective January 1, 2022. A hearing regarding the proposal will be held on December 27, 2019, and comments are due by December 31, 2019.

2020 Withholding Formula

The state has a flat 5% income tax rate and does not use withholding allowances. The formula also incorporates a standard deduction, which increased to $2,650 for 2020, up from $2,590 in 2019.

Nebraska

On November 15, 2019, a state withholding certificate for use starting in 2020 was released by the state revenue department. The Form W-4N is to be submitted whenever employees submit federal Form W-4 on January 1, 2020, or later. Employees who submit a federal Form W-4 before January 1, 2020, do not need to fill out Form W-4N. If employees have not submitted a valid state withholding certificate, defined as a Form W-4 from 2019 or earlier, or Form W-4N starting in 2020, the employer must withhold at the highest tax rate, 6.95%, as if the employee was single with no allowances.

Form W-4N may also be used to claim exemption from withholding if an employee had no Nebraska income tax liability in the previous year and expects no liability in the current year. An exemption lasts for one year and must be renewed by February 15th of each year.

New Mexico

New Mexico is to continue to use the federal Form W-4 to calculate state withholding in 2020. The state is planning to update its withholding methods instead of creating a state withholding certificate. The updated withholding methods are to be released in the next few weeks.

New Mexico is one of the states that uses the allowances on the federal Form W-4, Employee’s Withholding Allowance Certificate, to calculate state withholding. However, the state has not allowed more than three allowances to be used to calculate state withholding, even if more are claimed.

Ohio

Revised withholding formulas, effective January 1, 2020, were released on October 30th by the state tax department. The tax rates used in the percentage method decreased, implementing income tax rate cuts passed in the state’s budget for fiscal 2020 and 2021. The percentage method’s tax rates range from 0.516% to 5.164%, compared to a range from 0.538% to 5.379% used in the 2019 percentage method. The annual value of an exemption remained $650. The state also released an optional computer formula and wage-bracket tables.

Oregon

The state revenue department announced on October 25, 2019, that proposed changes to several Oregon rules would lower the state’s flat supplemental withholding rate, effective January 1, 2020, and expand procedures for withholding when employees do not provide a valid withholding certificate. The changes to the rule would decrease the flat withholding rate for supplemental wages to 8%, from 9%.

Proposed changes to other rules implement H.B. 2119 that requires employers to withhold at a flat 8% if employees do not provide a valid withholding certificate, effective January 1, 2020. The proposed rule defines a withholding certificate as Form OR-W-4, Oregon Employee’s Withholding Allowance Certificate, or any version of the federal Form W-4 from 2019 or earlier, whether marked specifically for Oregon withholding purposes or not. Changes to employees’ state withholding are to be made using Form OR-W-4, the proposal said. If employees provide a new federal Form W-4 in 2020 or later, but have not also provided Form OR-W-4, the employer is to withhold at a flat 8%, the proposal said.

Comments on the proposed rules were due by November 26, 2019.

Rhode Island

A draft version of Rhode Island’s new quarterly withholding return was released on November 18, 2019, by the state taxation division. Effective on January 1, 2020, all employers must file the new Form RI-941, Employer’s Quarterly Tax Return and Reconciliation, regardless of their payment frequency, replacing a system in which employers filed a return corresponding to their payment frequency. The new return is to be due the last day of the month after the end of each quarter, with the first return due April 30, 2020.

Utah

An updated version of Utah’s withholding guide was released on November 15, 2019, by the state tax commission, which includes an unchanged withholding formula.

The updates to the guide change the procedure by which some employees exempt from withholding claim exemption, including military spouses and interstate transportation workers, to reflect the layout of the 2020 Form W-4. These employees should write “Exempt” in box 4(c) of the 2020 Form W-4, instead of “Utah Exempt” in box 7 of 2019 and earlier Form W-4, while still writing “Utah Copy” at the top of the form, the commission said.

The changes are effective on January 1, 2020.

Wisconsin

Wisconsin is to require new employees and current employees that wish to change their state withholding to fill out the state withholding certificate starting in 2020, a revised version of the form said.

The revised Form WT-4 is to be filled out by new employees, effective January 1, 2020. Current employees who wish to change the number of state allowances claimed must also use Form WT-4 starting in 2020. Current employees do not need to fill out Form WT-4 if they do not need to change the number of state allowances claimed in 2019.

Missouri

States Update Employer Rules for Child-Support Payments

Employer requirements for electronic child-support payments were recently updated in the following states:

Nebraska

Employers with at least 50 employees must send income withholding for child support electronically using the state portal.

Washington

The state portal must be used to electronically send income withholding for child support if the employer has at least 10 employees or contractors; up to nine employees and has received an income-withholding order from the state for one employee; and contracts with a payroll-processing provider or is required to pay taxes electronically.

West Virginia

Employers with more than 50 employees must submit child-support payments electronically using the state’s free Smart E-Pay portal or the state Department of Health portal, which costs $1 per transaction.

Employers must have valid usernames and passwords to access all state portals.

Income Tax

Colorado Updates

Colorado Proposes Big Changes to Wage Protections, Exemptions

Under a proposal that is to appear on November 25, 2019, in the state register, most Colorado employees would be covered by Colorado wage and hour protections. The proposal would establish a new minimum salary threshold for overtime exemptions and would clarify and revise other exemptions, credits, and posting requirements. Publication in the state register would start the formal rulemaking process.

The proposal is to be adopted on January 10, 2020, as a final rule and will be effective March 1, 2020, or July 1, 2020, for newly exempt salaries.

Denver Minimum Wage Proposal Sent to City Council

Under a proposal that was sent to the city council, Denver would establish a $12.85 hourly minimum wage in 2020. The proposal would establish an hourly minimum wage of $12.85 on January 1, 2020. The minimum wage would rise to $14.77 on January 1, 2021, and to $15.87 on January 1, 2022. The wage would be adjusted for inflation in subsequent years.

Comments from hearings resulted in the final measure being adjusted so that the first incremental increase was reduced to $12.85 from the originally proposed $13.80 hourly minimum wage. The increases also were modified to last an extra year, to 2022 instead of 2021.

Earned Vacation Pay Is Owed on Separation, Colorado Agency Says

Vacation pay that is earned by Colorado employees under the terms of an employer-employee agreement must be paid at separation from employment under permanent rules that were adopted by the Colorado Department of Labor and Employment.

The rules, which were adopted on October 25, 2019, are to take effect on December 15, 2019.

Wisconsin

Illinois Updates

Chicago Mayor Presents Plan to Raise City Minimum Wage to $15

Under a measure introduced on November 13, 2019, by Mayor Lori E. Lightfoot, Chicago’s hourly minimum wage would rise to $15 in 2021, from $13 in 2019. The proposal was included in Lightfoot’s 2020 budget, which was presented to the city council. Under the measure:

  • Exemptions that allow a subminimum wage to be paid to disabled workers and youth would be removed starting in 2024.
  • The youth-worker minimum wage would rise to $10 in 2020 and $15 by 2024.
  • The exemption for workers younger than 18 would be eliminated after 2024.
  • The hourly minimum wage would rise to $14 on July 1, 2020, for large employers with more than 20 employees, and then to $15 on July 1, 2021.
  • The minimum wage would be reviewed each year for inflation-related adjustments, starting in 2022.
  • Extra time to phase-in the minimum wage increase would be given to small employers with up to 20 employees, rising 50 cents a year starting in 2020 and reaching $15 by 2023.
  • Microbusinesses with fewer than four employees would not be subject to the measure’s minimum wage increases.
  • The minimum wage for tipped workers would rise to $8.40 from $6.40 in 2020.
  • A study of the effect of tipped wages and the effectiveness of enforcement would be undertaken in 2020.

Illinois Bill to Allow Endorsement Pay for College Athletes

A bill that allows collegiate student-athletes to receive compensation for endorsements is under consideration by the state legislature. Under the measure, public and private Illinois colleges and universities that offer bachelor’s degrees could not prevent student-athletes from receiving compensation for use of an athlete’s name, image, or likeness. The measure, which would take effect on January 1, 2023, was passed by the House and referred to the Senate on October 30, 2019.

Missouri

California Updates

64% of California’s Independent Workers Now Employees

A new California law turned thousands of independent contractors into employees, including truckers, janitors, and gig workers. The UC Berkeley Labor Center brief notes that on-demand workers for companies like Uber Technologies Inc. and Lyft Inc, who’ve received the majority of attention, represent a fraction of workers covered under Assembly Bill 5. A.B. 5 creates a three-part test for determining when someone is an employee or an independent contractor. About 64% of independent contractors—including janitors, maids, and other cleaners; truck and taxi drivers; and retail, grounds maintenance, and child-care workers—are presumed to be employees. These workers typically earn a lower hourly median wage of $18.87.

Gig companies are currently awaiting the California Attorney General’s office’s approval of the title and summary for a proposed initiative they’re bankrolling to diminish the law’s sway. The proposed “Protect App-Based Drivers and Services Act,” if it qualifies for the November 2020 ballot, purports to restore flexibility for gig workers. The California Labor Federation hopes the new law significantly reduces the number of workers misclassified as contractors.

The UC Berkeley labor researchers said the law will also apply to an additional 27% of contractors unless strict provisions are met, such as licensing requirements. Those jobs include construction workers; hairdressers, barbers, and other personal appearance workers; designers and other artists; writers, editors, and photographers; and sales representatives. Some high-earning occupations such as doctors, lawyers, and accountants, with a median hourly wage of $41.57, aren’t covered by the law.

California Raises 2020 Exemption Rates for Tech Workers, Doctors

In a statement released on October 22, 2019, California’s computer-software employees are to be exempt from state overtime requirements if they earn at least $46.55/hour, $8,080.71/month, or $96,968.33/year. Licensed physicians and surgeons are to be exempt if they earn at least $84.79 an hour. This will go into effect on January 1, 2020.

The 2020 amounts reflect increases from those in effect in 2019. In 2019, computer-software employees are exempt from state overtime requirements if they earn at least $45.41/hour, $7,883.62/month, or $94,603.25/year, and licensed physicians and surgeons are exempt if they earn at least $82.72/hour.

California Seeks Comments for On-Demand Worker Classification

California is seeking comments on a ballot proposal that would classify ride-share drivers and on-demand delivery workers as independent contractors, rather than employees. Comments may be submitted by December 2, 2019, on the attorney general’s website, which includes information on the proposal.

California Law Takes Shot at Limiting Worker Arbitration

According to some legal scholars, California’s new law to limit the use of workplace arbitration agreements stands a chance to survive judicial review despite the headwinds against such restrictions. The state finalized a law this month that prohibits employers from requiring that job applicants or workers sign arbitration pacts as a condition of employment.

The fate of California’s new law has major implications for employment litigation. Mandatory arbitration is particularly widespread in California, where about two-thirds of private employers use them, compared with 54% nationwide, according to a 2018 study from the left-leaning Economic Policy Institute. That high concentration is a consequence of companies reacting to the state’s protective employment laws. The California Chamber of Commerce, which opposed passage of the law, said it’s reviewing its options for a legal challenge.

Wisconsin

Florida Minimum-Wage Effort Meets Signature Quota for 2020 Ballot

A Florida initiative to raise the state’s hourly minimum wage to $15 by 2026 received enough valid signatures to appear on the state ballot in 2020. Data showed that the Raising Florida’s Minimum Wage Initiative (18-01) received 766,324 valid signatures. 766,200 were needed to qualify for the November 3 ballot. Statewide and congressional district signature totals are unofficial until the measure is certified by February 1, 2020.

The initiative would raise the state’s hourly minimum wage to $10, effective September 30, 2021. The wage would rise by $1 every September 30th until it reaches $15 on September 30, 2026. Starting September 30, 2027, the minimum will be reviewed annually for possible inflation-related adjustments.

Wisconsin

Kentucky County Increases Occupational Tax Rate

Per an ordinance passed by Pendleton County, Kentucky, is to increase its occupational tax rate to 1%, from 0.5%, effective January 1, 2020.

Wisconsin

Michigan Governor Proposes to Expand Overtime Eligibility

The state labor department plans to expand workers’ overtime eligibility under a directive issued by Governor Gretchen Whitmer on October 24, 2019. Whitmer’s request starts the rulemaking process, which is to include feedback from employers and stakeholders. The department is to submit a request for rulemaking to expand the right to overtime pay to nearly 200,000 Michigan workers. After the rulemaking is submitted, the process to finalize the overtime rule could take from six months to a year.

Ohio

New Mexico Updates

New Mexico Extends Tax Deadlines for Tropical Storm Imelda

New Mexico state tax deadlines were extended for victims of Tropical Storm Imelda in Texas. Individuals or businesses in the Texas counties of Chambers, Harris, Jefferson, Liberty, Montgomery, and Orange have until January 31, 2020, to file returns and make payments for several types of New Mexico taxes, including withholding, that were originally due from September 17, 2019, to January 31, 2020, and the same extension will be granted by the IRS for federal taxes.

To take advantage of the extension, taxpayers should write “Tropical Storm Imelda” on the top of paper returns and should send a letter to the department if they are filing electronically. While the department is planning to waive penalties for returns and payments made under the extension, it cannot waive interest on late payments.

3 Cities in New Mexico to Raise Minimum Wages in 2020

The hourly minimum wage is to rise in the following New Mexico cities, effective January 1, 2020:

  • Albuquerque’s hourly minimum wage is to rise to $9.35, from $9.20. $8.35, from $8.20, if Albuquerque employers provide health-care or child-care benefits to employees during any compensation period and pay an amount that is at least equal to an annualized cost of $2,500. The hourly minimum wage for tipped employees is to rise to $5.60 from $5.50.
  • Bernalillo County’s hourly minimum wage for employees who work within the unincorporated areas of the county, outside city limits, is to rise to $9.20 from $9.05.
  • The Las Cruces hourly minimum wage is to rise to $10.25, from $10.10.
Ohio

New Jersey Updates

Disability Insurance Wage Bases Rising in 2020

  • Effective on January 1, 2020, the temporary disability insurance tax rate for employees is to be 0.26%, up from 0.17% for 2019.
  • The 2020 family-leave insurance tax rate for employees is to be 0.16,% up from 0.08% for 2019.
  • For 2020, the unemployment tax rate for employees is to be 0.425%, unchanged from 2019. The rate includes a base rate of 0.3825% allocated to the state’s unemployment trust fund and an assessment of 0.0425% allocated to the state’s workforce development-supplemental workforce fund.

New Jersey Issues 2020 Room, Meal, Lodging Credits

The amounts New Jersey employers may provide to covered employees for room and board, meals, and lodging that would be credited toward the minimum wage is to rise in 2020. The new rates are to take effect on January 1, 2020.

The calculated dollar equivalents for employer-provided room and board, meals, and lodging in lieu of wages paid for employee services are $27.20 for daily meals, $101.80 for weekly lodging, and $237.60 for full weekly room and board. Breakfast is valued at $8.20; lunch, $8.20; and dinner, $10.90. These amounts reflect increases from the 2019 rates that are $26.50 for daily meals, $99.20 for weekly lodging, and $231.50 for full weekly room and board. Breakfast in 2019 is valued at $8; lunch, valued, $8; and dinner, $10.60. These amounts are used when employers do not assign a value to such payments.

Chicago

North Carolina Updates

North Carolina Increases Standard Deduction for 2020

A North Carolina bill increasing the state standard deduction for 2020 was signed on November 8, 2019, by Governor Roy Cooper. The measure, which will take effect on January 1, 2020, increases the standard deduction to $10,750 from $10,000 for single individuals and married couples filing separately; to $16,125 from $15,000 for heads of households, and to $21,500 from $20,000 for married couples filing jointly.

North Carolina Releases Disaster-Exemption Reporting Forms

Forms that employers must submit to take advantage of North Carolina’s disaster-recovery exemption from state taxes were released on November 12, 2019, by the state revenue department. North Carolina exempted out-of-state employees working in disaster-recovery efforts on critical systems, including communications networks and utilities, from state income tax and unemployment tax. However, to take advantage of the exemption, North Carolina employers must notify the state of any businesses the employer requests to perform work in the state within 90 days of the end of the disaster period, while nonresident employers must send a list of employees working on disaster-recovery business within 90 days of ending such business in the state.

Two new forms, Form NC-CICN, Critical Infrastructure Company Notification, and Form NC-NBN, Nonresident Business Notification, allow employers to provide such notification.

Chicago

Ohio Updates

Some Ohio Local Tax Rates Change in November 5th Elections

Municipal tax rate changes in Ohio include:

  • Cincinnati, in Hamilton County, to 1.8%, from 2.1%, effective January 1, 2020. The change would only take effect if voters also approved an increase to Hamilton County’s sales tax at an election in 2020.
  • Circleville, in Pickaway County, to 2.5% from 2%, effective January 1, 2020.
  • Lisbon, in Columbiana County, to 2% from 1.5%, effective January 1, 2020.
  • Salem, in Columbiana County, to 1.5% from 1.25%, effective January 1, 2021.
  • Sidney, in Shelby County, to 1.65%, from 1.75%, effective January 1, 2020. In Shelby, a 0.25% addition to the city’s base 1.5% tax rate was scheduled to expire at the end of 2019, but voters approved a 0.15% addition November 5, meaning that the city’s total tax rate is still to decrease.
  • Tallmadge, in Summit County, to 2.25%, from 2%, effective January 1, 2020.
  • Union, in Montgomery County, to 1.5%, from 1%, effective January 1, 2020.
  • Additionally, the village of Mifflin, in Ashland County, voted to repeal its income tax, election results showed.

Voters in several school districts appeared to pass new income taxes and tax rate increases. All school-district tax changes are effective on January 1, 2020.

  • Amanda-Clearcreek Local School District, in Fairfield County, a 2% tax. The district’s tax previously expired on December 31, 2016, and had a previous rate of 1.5%.
  • Central LSD, in Defiance and Williams Counties, to 1.25%, from 0.75%.
  • Triway LSD, in Wayne and Holmes Counties, to 1.75%, from 0.75%.

Election results are unofficial until certified.

Chicago

Oregon Updates

Wilsonville, Oregon Payroll Tax Rate Unchanged for 2020

Wilsonville’s transit payroll tax rate is 0.5% for 2020, unchanged from 2019. The payroll tax, which is assessed on all employers doing business in the city, is paid by employers and is not withheld from employees’ wages.

Chicago

Pennsylvania Updates

Pennsylvania High Court Weighs In on Overtime Calculations

On November 20, 2019, The Pennsylvania Supreme Court ruled that overtime compensation for retail employees paid with a set weekly salary plus commissions regardless of hours worked should be calculated in a different manner. The calculation offered by the state should use a 1.5 multiplier rather than the 0.5 multiplier allowed by the federal government. Whether overtime compensation for salaried employees with varying hours may be calculated under the fluctuating workweek method under state law depends on the reading of a statutory provision. The provision states that each employee shall be paid for overtime not less than 1.5 times the employee’s regular rate of pay for all hours in excess of 40 hours in a workweek.

Calculating overtime for hourly workers under this provision is relatively straightforward, but the calculation is more convoluted for workers who are salaried, paid by commission, or paid in ways that do not always easily convert to an hourly structure. Federal regulations address many compensation structures in detail, but the state’s labor secretaries have provided only limited guidance on how to convert the generic overtime compensation formula to other compensation methods. The state’s inclusion of some elements of federal law but not others may be interpreted as an intent to reject the 0.5 multiplier under the fluctuating workweek method in favor of the 1.5 multiplier, the high court said in its opinion.

Philadelphia Council Approves Domestic Worker Rights Bill

Philadelphia domestic workers are to receive rest and meal break, paid time off, and retaliation workplace rights and protections, as well as written contracts, under an ordinance that was signed by Mayor Jim Kenney on November 12, 2019. It will go into effect on May 1, 2020. The ordinance, which was unanimously passed by the City Council, was publicly signed on November 26, 2019.

Under the bill, written contracts that contain specific information also are to be required between employers and domestic workers who work at least five hours a month for that employer. The written contract, which must be in English and any language preferred by the domestic worker, must include the following:

  • A list of job duties
  • Hourly wage and overtime wage data
  • A weekly schedule that includes the number of work hours in a week
  • The manner and frequency of wage payment
  • Meal and rest breaks
  • Paid or unpaid leave inclusive of sick time
  • Paid holidays
  • Benefits provided
  • Modes of required transportation and whether it is to be provided
  • The value of any housing to be provided
  • Sleeping periods and personal time for live-in workers
  • The contract’s duration
  • And any other agreed-upon terms and conditions.

Domestic workers must be given sufficient time to review the contract, which must then be signed and dated by all parties.

Chicago

South Dakota Updates

IRS Grants Filing, Penalty Relief Storm Victims

The IRS announced on November 19, 2019, that victims of severe storms, tornadoes, and flooding which occurred in September have until January 31, 2020, to file some payroll tax returns. Additionally, penalties on payroll and excise tax deposits due from September 9, 2019, to September 23, 2019, would be suspended as long as the deposits were made by September 24, 2019.

A list of eligible counties is available on the disaster relief page on the IRS website.

Chicago

Texas Updates

San Antonio Businesses Pursuing Injunction for Sick Leave Law

Recent revisions to San Antonio’s paid sick leave law aren’t stopping a coalition of business groups there from going forward with a request for a temporary injunction to delay the measure. A hearing for that injunction is scheduled for November 7, 2019, at the Bexar County District Court. In July, the parties agreed to delay court proceedings while the City Council worked to amend its paid sick leave ordinance.

On October 3, 2019, the San Antonio City Council passed a new ordinance that simplified the requirements so that all businesses must give workers 56 hours of paid sick leave per year. The revisions came from a task force of business groups, advocates, and labor organizers. The new ordinance is set to go into effect on December 1, 2019. San Antonio is one of three Texas cities grappling with paid sick leave mandates, as businesses also have sued in Austin and Dallas. The Austin ordinance awaits a review from the Texas Supreme Court, while the Dallas ordinance has gone into effect while the lawsuit moves forward.

Chicago

Washington Updates

Tacoma Weighs Aligning Wage, Leave Policies With State

The city of Tacoma is exploring how to better align its paid sick-leave and minimum-wage requirements with the state. Considerations related to the alignment of local and state minimum wage and paid sick-leave standards was the focus of a presentation by the city’s Employment Standards Office to the Government Performance and Finance Committee, on November 19, 2019. Tacoma’s hourly minimum wage rose to $12.35 on January 1, 2019, from $12 in 2018. The city’s hourly minimum wage is to be adjusted annually for inflation in the subsequent years to follow. The Employment Standards Office’s online presentation is available on their website’s calendar.

State Unemployment wage bases

For more updates on state unemployment wage base changes, visit our SUTA Wage Bases page.

FUTA Credit Reductions

For more updates on state eligibility, visit our FUTA Credit Reductions page.

Payroll Tax Rates and Changes

Visit our Payroll Taxes: Rates and Changes page to make sure you stay compliant.

QUOTE

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Business Administrator, Christ’s Church

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