2016 brought some landmark changes to the employment front. Many of these changes are set to take effect in 2017 – such as new ACA reporting deadlines, earlier W-2 filing date, revised I-9 form, state minimum wage increases, and new rules concerning OSHA recordkeeping, payroll cards, and fiduciary duties for retirement plans. Employers must also look out for changes in equal pay laws, paid sick leave, and the new overtime rule which may or may not come to pass.
President-elect Donald Trump has pledged to overturn various legislations enacted by the Obama administration – which makes the fate of workplace policies such as the revised overtime rule and the ACA uncertain. The common agreement is that, meanwhile, employers should abide by current laws.
Overtime Rule Uncertainty
The updated Fair Labor Standards Act was to begin Dec. 1, 2016, but has been delayed by a federal judge who issued a preliminary injunction. Should the revised rule eventually pass, employers must:
- Increase the minimum annual salary for exempt executive, administrative and professional employees from $23,660 to $47,476.
- Raise the minimum annual salary for exempt highly compensated employees from $100,000 to $134,004.
- Pay overtime to any employee who works over 40 hours in a week and does not meet the salary threshold.
Incentive payments, such as commissions and nondiscretionary bonuses, may be used to satisfy up to 10 percent of the salary threshold – as long as they’re paid quarterly or more frequently.
Employers should be prepared to comply with the rule should it be allowed to proceed, or act according to further direction given by the court.
New Affordable Care Act Reporting Deadlines
Employers received much-needed relief on ACA reporting deadlines for tax year 2015. While these filing breaks were not fully extended to tax year 2016, the due date for distributing forms to employees has been extended by one month.
For tax year 2016 (forms filed in 2017):
- Furnish employees with a Form 1095-C, Employer-Provided Health Insurance Offer and Coverage by March 2, 2017.
- File Forms 1095-C and 1094-C (transmittal form) with the IRS by Feb. 28, 2017 if filing on paper, and by March 31, 2017 if filing electronically.
The IRS has also extended the “good faith effort” waiver to tax year 2016. Employers will not be penalized for inaccurate or incomplete information on the reporting forms – provided the forms were filed on time and the employer made a “good faith effort” to comply with the ACA’s reporting requirements.
Earlier W-2 Filing Date
Depending on the filing method, employers previously had until the end of February or March to file W-2 and W-3 forms with the Social Security Administration (SSA). Starting with tax year 2016, however, W-2s and W-3s are due to employees and the SSA by Jan. 31 of the following year. This goes for both paper and electronic filers.
Note that W-2 filing deadlines for states may differ from federal law, but several states have adjusted their filing deadlines to match the federal Jan. 31 filing date.
Revised I-9 Form
As of Jan. 22, 2017, employers must start using revised Form I-9, Employment Eligibility Verification – as published by the U.S. Citizenship and Immigration Services. Changes to the form include:
- Validation fields to ensure data is accurately entered
- Drop-down lists and calendars
- Instructions provided separately from the form
- A quick-response code that generates after printing the form and can be helpful in streamlining audit processes.
The previous version of Form I-9 (dated March 2013) may be used until Jan. 21, 2017.
State Minimum Wage Increases
On Jan. 1, 2017, 40 cities and states will see an increase in the minimum wage and at least 30 states will have minimum wages that surpass the federal minimum wage level, which presently stands at $7.25 per hour. Minimum wages across the country vary from the federal minimum to $15 per hour for certain Seattle employers.
Among the states with Jan. 1 increases are Alaska, Arizona, Arkansas, California (for large employers), Colorado, Connecticut, Florida, Hawaii, Maine, Massachusetts, Michigan, Missouri, Montana, New Jersey, Ohio, South Dakota, Vermont and Washington. New York’s increase is effective Dec. 31, 2016.
Maryland, Oregon and Washington D.C. increases take effect later in the year, on July 1, 2017. Visit your state’s Department of Labor website for details.
Expansion of Equal Pay Laws
The Equal Employment Opportunity Commission has proposed changes to the EEO-1 report to collect pay data from employers with 100 or more employees. Affected employers would be required to report their employees’ wages – broken down by gender, race and ethnicity. The proposed rule, which hopes to eliminate discrimination and reduce the gender wage gap, would begin in 2017, with employers submitting their report to the Joint Reporting Committee by March 31 each year (a change from the Sept. 30 due date for 2016). The EEO-1 report for 2017 will be due March 31, 2018. Employers should monitor developments on this proposal as the new administration takes over.
In addition to federal initiatives, several states – including New York, Maryland, California, Illinois, and New Jersey – have expanded their equal pay laws or broadened wage transparency which allow employees to discuss their compensation with each other.
Starting later in 2017, Philadelphia employers will not be allowed to request wage history from job applicants; this new law is part of the state’s effort to curb pay inequality. Massachusetts passed a similar law in 2016, and other states are proposing similar legislations.
Mandatory Paid Sick Leave
A few states and numerous cities require that employers provide paid sick leave to qualified workers. California, Connecticut, Massachusetts, and Oregon have laws that mandate paid sick days covering large numbers of employees. Other impacted areas include:
- Emeryville, Los Angeles, Oakland, San Diego, and San Francisco, California
- 12 cities in New Jersey
- Washington D.C.
- Montgomery County, Maryland
- New York, New York
- Philadelphia, Pennsylvania
- Seattle and Tacoma, Washington
- Arizona (July 1, 2017)
- Berkeley (Oct. 1, 2017) and Santa Monica (Jan. 1, 2017), California
- Chicago and Cook County, Illinois (July 1, 2017)
- Minneapolis and St. Paul, Minnesota (July 1, 2017)
- Morristown, New Jersey (Jan. 11, 2017)
- Vermont ( Jan. 1, 2017)
- Spokane, Washington (Jan. 1, 2017)
- Washington state (Jan. 1, 2018)
Employers covered by state and local laws should follow the law that most benefits the employee. Check with your state labor department to determine if you must provide paid sick leave to your employees.
New OSHA Recordkeeping Rule
In May 2016, the Occupational Health and Safety Administration (OSHA) published an amendment to its current Improve Tracking of Workplace Injuries and Illnesses regulations. Under the new rule, which starts Jan. 1, 2017, certain employers must electronically submit the OSHA injury and illness data that they’re already required to keep. The electronic submission due dates for OSHA forms vary depending on the employer’s size and industry and the specific forms filed but generally start in July 2017. Note that this federal rule also applies to state OSHA plans.
New Payroll Card Rules
A rule issued by the Consumer Financial Protection Bureau (CFPB) calls for more transparency on payroll cards to ensure that employees who use these cards know what they’re getting into. For example, employees must receive three disclosures, including short- and long-form disclosures, before the account is set up. The CFPB rule will take effect Oct. 1, 2017. In addition, some states have their own payroll card requirements, which differ from federal law. States with new payroll card rules include Connecticut (enacted in October 2016), New York (beginning early 2017), and Pennsylvania (effective May 2017).
DOL Fiduciary Rules for Retirement Plans
The United States Department of Labor has reshaped the meaning of fiduciary investment advice for retirement plans, broadening the types of advice that it covers and thereby increasing the number of advisors who operate as fiduciaries. The DOL believes that the regulation will hold advisors to the fiduciary standard, which stops them from putting their own financial interests over those of their clients. The rule – which begins on April 10, 2017 – will impact financial advisors who also serve as brokers of 401(k) plans and IRAs.
Call Your Licensed Professional
With so many new rules to follow in 2017 and the uncertainty of what may or may not change with a new administration, you may consider contacting an employment and/or tax attorney to ensure you are following all applicable laws in the coming year.
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