The term Payroll Compliance refers to the laws that companies need to comply with when it comes to the employees they hire and pay. A few of these compliance laws are federal, meaning they apply in all fifty states, but many are not, meaning the rules and regulations vary from state to state. If you plan on hiring more than twenty employees in any given year, it’s important to understand the payroll compliance laws that apply in your area so you can follow them appropriately. Here are the most important payroll compliance laws that will be active in 2022 and after (in no particular order)
The American Health Care Act (AHCA) was a piece of legislation passed by the 115th United States Congress in order to repeal major portions of the Affordable Care Act. This controversial bill would have repealed Obamacare’s individual mandate and its employer mandates, as well as eliminated Medicaid expansion under Obamacare. The Senate recently voted down this healthcare bill on Tuesday, July 17th with three Republicans breaking ranks and voting no.
In response, President Trump is considering halting cost-sharing subsidies that allow lower-income Americans to buy health insurance while Congress deliberates on its next steps. With no clear solution in sight, the ACA marketplace has grown uncertain. Taxpayers are now facing significant increases in premiums and fewer choices for coverage due to some insurers pulling out of areas or leaving markets altogether.
Upcoming Tax Cuts
In April of 2018, Congress passed the Tax Cuts and Jobs Act. This sweeping legislation will affect everything from how much you make in each paycheck, what kinds of deductions are allowable, and how much you will owe for state and local taxes. The Tax Cuts and Jobs Act included a provision that lowers the individual income tax rate, although it increases an individual’s burden if they were subject to the alternative minimum tax (AMT). Corporations are also receiving tax cuts with a lowered corporate income tax rate as well as higher limits on deductions they can take.
DOL Fiduciary Rule Affects Retirement Plans
On July 1, 2017, the Department of Labor (DOL) released a new rule designed to protect retirement investors. The new rule is called the fiduciary rule and it affects how financial advisors can work with clients on their retirement accounts. For decades, advisors could have offered advice on any investment without having to disclose possible conflicts of interest or risks as long as they had been approved by the SEC or another regulatory body. If they offered advice and also provided transaction-based products they only needed to register their firm with the SEC in order for clients not to know that there was an advisor that worked on their investments.
New Guidance for Meal Periods
Last year, California passed the Healthy Workplaces and Opportunity Act of 2014 which entitles employees to a meal period of at least 30 minutes every five hours they work. This year, legislation was introduced in New Jersey that would provide lunch breaks as well. With so much new legislation, it’s important for businesses to know what their responsibilities are when it comes to payroll compliance. Here are some key points you need to know about payroll law changes from 2020-2022:
In 2022, employers will be required to follow guidelines set by the Affordable Care Act. They’ll be required to provide mental health coverage and post any data collected through electronic activity tracking software on an online platform where individuals can easily find it. Employees who use credit reports may face fines if employers use this information as grounds for refusing employment. Fines against employers could be up to $5 million dollars if they’re found guilty of race or gender discrimination or retaliating against whistleblowers who report misconduct or violations within their company. The Fair Credit Reporting Act is also slated to change, with stricter rules prohibiting reporting negative information on a person’s credit report without permission or notice after seven years have elapsed from the date of delinquency reported.
In 2022, the new overtime law will be implemented in over 60% of U.S. states on January 1st. This new law can provide a substantial amount of back pay to hourly employees who are entitled. If you have hourly employees, the updated laws may affect their salary and leave them entitled to more compensation than they currently are receiving. Keep in mind, that even if the worker has already been underpaid, they are still entitled to make up for it after 2022 – so you may want to consider remediating any workers who have been paid improperly. The last major update was the end of the tip credit provision which is set to expire at the end of 2020. Check your state’s requirements for how much an employer must pay tipped employees when this provision expires!
Upcoming Minimum Wage Increases
Starting in January, the minimum wage will increase for many states. Minimum wage increases in Massachusetts will jump from $11 an hour to $12.50 an hour for companies with 11 or more employees and from $13 an hour to $14 per hour for smaller employers. Starting in July 2020, hourly wages are set to increase by 50 cents, reaching the new rates of $12.50 and $14 per hour respectively. And starting on November 1, 2020 all small businesses in Arizona (whether they have employees or not) will be required by law to provide up to 40 hours of paid time off a year if they pay less than the federal tipped-wage minimum (currently set at $7.25/hour).