What’s on the horizon?

A number of changes that affect employers are on the horizon for 2020. Here are some you should be aware of:

Minimum wages

Currently, the federal minimum wage is $7.25 per hour (set in 2009). As 2020 rolls in, 20 states have increased their minimum wages, and 4 others will implement increases later in the year according to U.S. News & World Report. Most increases are modest: most less than $1 an hour. California bumped theirs up to $13 from $12 and Washington State moved theirs from $12 to $13.50. Continuing its yearly increases begun in 20 17, The District of Columbia will see a $15 per hour minimum wage on July 1, 2020.

There are arguments for and against a higher minimum wage, but according to a recent Pew Research Center survey, two-thirds of Americans favor a minimum wage of $15 per hour.

FLSA Final Rule clarifies which perks and benefits must be included in regular rate of pay and which do not have to be included

The U.S. Department of Labor (DOL) announced on December 12, 2019, a Final Rule that spells out how employers can and cannot use perks and benefits as part of an employee’s regular rate of pay. The DOL also eliminated restrictions determining when “call-back” pay and similar payments could be excluded from the regular rate of pay as well as updating the DOL regulations regarding “basic rate” as an alternative to the regular rate under specific circumstances.

The Final Rule was published on December 16, 2019 in the Federal Register and will be effective January 15, 2020.

New for federal employers

Two items that affect federal employers were attached to a compromise defense spending bill signed by President Trump on December 20, 2019.

• Federal Employee Paid Leave Act provides 12 weeks of paid leave to care for a new baby after birth, adoption, or beginning of foster care occurring after October 1, 2020. This extends the coverage already available for military service members to include civilians (over 2 million workers). Championed by many, including the Society for Human Resources Management (SHRM), this law will encourage efforts already to extend it to non-federal workers.
• Fair Chance Act (ban-the-box) takes effect two years after enactment and applies to both federal employers and federal contractors and restricts employer requests for criminal background information until a conditional job offer has been made. (Exceptions are made for law enforcement and national security positions.) Many states, cities, and counties already adhere to this directive in public as do some private-sector employers.

New Form W-4

The IRS released the final version of the 2020 Form W-4 on December 5, 2019. Here are the highlights:

• Eliminated withholding allowances
• Provides steps to adjust employee withholding
• Replaces old worksheets with straightforward questions

Who must file the new form?

• Any new hire employee who will have wages paid in 2020
• Those who want to adjust their withholding

Those who submitted a Form W-4 in any year before 2020 do not have to use the new form. Their withholding will be computed according to their most recently submitted W-4.

You can read more on the IRS FAQ page. The IRS also provides an on-demand webinar explaining the new form and how to use it.

Work Opportunity Tax Credit (WOTC) extended through 2020

On Dec 17, the House approved an end-of-year spending bill and a companion tax extending measure. The Senate approved them on December 19, and they were signed into law on December 20, 2019. This package extended the WOTC through the end of 2020.

Extension of the Empowerment Zone tax incentives through 2020 was also included.

In April 2019, D-Calif. Mike Thompson and R-N.Y. Tom Reed introduced H.R. 2213 that would permanently extend WOTC. The bill has wide bi-partisan support. A similar bill, S. 978 was introduced by R-Ohio Rob Portman and D-Md. Benjamin Cardin. SHRMS’s article provides more information.

Sage HRMS HR Actions and add-ons help you stay compliant

Sage HRMS HR Actions (HR Actions) provides the most current forms (like I-9s and the new 2020 Form W-4) to keep your HR both paperless and compliant. If you’d like to learn more about how these and other solutions can streamline payroll and HR processes while keeping you up to date with forms and requirements, give us a call at 1.888.421.2004, visit our website, or contact sales. We are happy to listen to your needs and see if our solutions might be just what you’re looking for.

Sources:

24 U.S. States Will See a Minimum Wage Increase in 2020 U.S. News & World Report

Two-thirds of Americans favor raising federal minimum wage to $15 an hour Pew Research Center

Final Rule: Regular Rate under the Fair Labor Standards Act U.S. Department of Labor (DOL)

President Signs S.1790, “National Defense Authorization Act for Fiscal Year 2020”

FAQs on the 2020 Form W-4   IRS

Understanding the 2020 Form W-4 and How to Use it to Calculate Withholding   On demand webinar and text   IRS

WOTC  DOL

One-Year Extension of Work Opportunity Tax Credit is Only a Start   SHRM