It’s more challenging than ever for employers to track, understand and implement the complex and ever-changing set of federal, state and local regulations. This is not only top of mind for your clients as they navigate business ownership, but it should also be a key consideration for you as you manage your firm. In the midst of an unpredictable election year, you can serve as a rock solid source of knowledge for your clients by closely tracking the
1. Form W-4 changes: Key changes to the Form W-4 include the elimination of withholding allowances and the ability for taxpayers to have more tax withheld to address the concerns of those who have had to unexpectedly pay tax when filing in the years following the Tax Cuts and Jobs Act of 2017. All new employees hired as of Jan. 1, 2020 must complete the new form which was released in December 2019. Existing employees are not required to complete a new form but can choose to adjust their withholding based on the new form. Any adjustments made after Jan. 1, 2020 must be made using the new form. Employers, therefore, must be prepared to compute employees' withholdings based on both the old and new versions of the Form W-4.
2. Final overtime rule: In September 2019, the U.S. Department of Labor announced its long-awaited final overtime rule to revise the federal regulations governing which employees are entitled to minimum wage and overtime pay under the federal wage and hour law. Among other changes, the final overtime rule raises the "standard salary" for the executive, administrative and professional white collar exemptions from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker), effective Jan. 1, 2020. The new rule also allows employers to use nondiscretionary bonuses and certain incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level in a 52-week period.
3. Worker classification: Worker classification continues to be addressed by enforcing agencies, in the courts and in local and state legislatures across the country. Perhaps the most impactful legislation this year, especially for workers of ridesharing services, is California AB5, effective January 2020. The new law will require employers to demonstrate a worker satisfies a three-part (ABC) test to be classified as an independent contractor in the state. Other state and local legislatures are considering similar legislation.
4. Multiple payment options available to businesses: In 2020, the rapid expansion of multiple faster payment options to send and receive funds will continue. New developments include the rollout of the Clearing House’s Real-Time Payments network and the expansion of same-day ACH for businesses and pay-on-demand products that allow workers to receive pay as it is earned. These convenient electronic payment options will continue to make non-cash payments increasingly popular. Businesses interested in improving their cash flow through utilizing these faster payment options and assisting their employees with financial flexibility should consult with their financial institution or payroll provider for more information on available payment options.
5. Privacy: All employers need to be mindful of the impact various privacy-related regulations have on the way they do business. One of the more actively discussed regulations going into 2020 will continue to be the California Consumer Privacy Act. Currently, any business that meets the CCPA criteria is required to provide employees with a privacy policy notice. However, the CCPA requirements will continue to undergo additional refinements as the Attorney General begins to issue final guidance in 2020. Additionally, more employers are utilizing biometrics to identify employees and track hours worked. However, unlike other methods of authentication, such as passwords, ID cards, etc., biometric identifiers cannot be changed once they’re compromised. Employers that use biometrics need to be aware of regulations such as the Illinois Biometric Information Privacy Act that are emerging at the state level.
As a trusted business advisor, it often becomes part of your role to help clients comply with laws that involve the Tax Code, HR policies and more. Your knowledge of regulation and thorough understanding of the unique needs of your clients’ businesses allow you to provide them with the resources they need to maintain compliance with all existing regulations and those to come in 2020. Not to mention, keeping up with these issues helps ensure your own firm remains compliant as well.
