Every new calendar year brings with it changes to payroll and wage laws. Unfortunately, change often comes in the form of non-negotiable mandates. This year is no exception. There are a host of new laws at both the federal and state level that affect how payroll and HR departments do what they do.
This post offers a summary of the top five payroll and wage mandates for 2020. Be sure your payroll and HR departments stay ahead of them. If you need help, you can always reach out to BenefitMall. We are a nationwide provider of payroll and benefits administration services.
1. New W-4 Form Official
Getting most of the attention this year is the mandate to use the new W-4 form. This form has been addressed extensively in some of our other blog posts, so there is no need to spell out the details here. Needless to say that all new hires must now submit the revised form during onboarding. Employees hired prior to January 1 are not required to submit a new form. They can if they wish to.
2. New Overtime Rules
After years of wrangling, the long-awaited Final Overtime Rule was settled this past December. It became effective on January 1. Under the new rule, the financial threshold for exempt workers not covered by overtime pay standards under the FLSA increases to $694 weekly or $35,568 annually.
The new rule also allows employers to count certain kind of incentive payments and non-discretionary bonuses as part of the threshold. Such additional payments can account for up to 10% of an exempt employee's standard salary for one year.
3. Elimination of the ACA's Individual Mandate
The Tax Cuts and Jobs Act of 2017 effectively eliminated the requirement among workers to purchase health insurance by eliminating the penalty for not doing so. That means as of January 1, workers are no longer required by law to purchase health insurance, either through an employer-sponsored plan or a healthcare exchange.
Companies are not exempt from offering qualifying health insurance under the ACA. In fact, they still face stringent enforcement efforts. All that has changed is the individual mandate. Employers must still offer qualifying insurance, but employees are not required to enroll.
4. More Strict Worker Classification
Worker classification has long been an issue that employers have to be concerned about. However, the issue takes a new twist in 2020 thanks to California AB5. This legislation, which became effective in January, makes it more difficult for California employers to classify workers as independent contractors. It affects everything from ride-sharing services to freelance writers.
The law applies only in California at this point. Employers in the Golden State should be prepared to vigorously defend any decision to classify workers as contractors. Outside of California, employers would be wise to pay attention to how all of this goes down. Remember that what starts in California has a habit of spreading to other parts of the country.
5. New Family and Sick Leave Laws
Employers in eight states and the District of Columbia now have laws on the books relating to paid family and sick leave. Employers in those jurisdictions should be aware of what the law says and how it applies to their businesses. Elsewhere, several other states have introduced proposals for their own paid family and sick leave laws. This is likely to be a very big issue nationwide by the time the 2020 election rolls around.
Change is part of life. It is part of payroll and HR too. Remember that compliance is not an option.