Employer ACA Reporting Deadline Extended
For the second year in a row, employers have more time to send the 1095-B and -C reports to individuals as required under the Affordable Care Act. The deadline has moved from January 31, 2018 to March 2, 2018.
However, the deadline for employers to file Forms 1094-B and -C and 1095-B and -C with the IRS remains unchanged. Employers must file 2017 forms by February 28, 2018, or April 2, 2018, if filing electronically.
In addition, the IRS said that it would allow “transitional relief” for employers that submit Sections 6055 and 6056 with incorrect or incomplete information as long as the employers file the forms in a timely manner and can show good-faith compliance efforts.
“Hey Oh! New IRS 1094 & 1095 Forms” KPA blog post
2017 Pay or Play Notices
Since 2016, employers with more than 50 full-time employees (including full-time equivalents) have been subject to the “play-or-pay provision.” The provision still applies to the 2017 plan year. This means employers must offer affordable health insurance and provide a minimum value to 95% of their full-time employees and their dependents up to age 26, or prepare to pay stiff penalties.
The IRS will start sending out Letter 226-J soon based on receiving employers” Forms 1094-C and 1095-C.
Should you receive a Letter 226-J, you’ll have 30 days to respond. Be sure to start working on your response immediately. You may also want to consult a reputable employment law firm, such as FordHarrison.
- Complete Form 14764 to say if you agree or disagree with the letter.
- If you disagree with the liability fee, you must fully explain your rationale and/or indicate changes needed on Form 14765.
- If you agree with the liability fee, follow the IRS’s instructions, sign the response form, and return it with your full payment in the envelope provided.
IRS’s “Understanding Your Letter 226-J”
Joint Employer Redefined
Under the Obama Administration, companies were considered “joint employers” when they hired and fired workers and when they set wages. Under that 2016 interpretation, it expanded the circumstances under which a business could be held liable for wage-law violations by staffing agencies, contractors, and franchisees.
The interpretation has been on the way out since June 2017 when the U.S. Department of Labor rescinded the interpretation. Most recently, the National Labor Relations Board (NLRB) reviewed it and also overturned the 2016 joint employer definition.
The NLRB stated that “indirect control” by one organization of another is no longer enough to be considered a joint employer. Instead, there must be “direct control.” This potentially gives companies more liability protection and makes it more challenging for contractors and franchise workers to form unions.
Browning-Ferris, the original case that had resulted in broader interpretation of a joint employer, is now before the U.S. Court of Appeals for the D.C. Circuit. That court might send the case back to the NLRB to reevaluate in light of its December 2017 joint employer definition reversal in the Hy-brand case.
How New Tax Law Affects Employee Benefits
At 570 pages of interpretation, the details of how the 2017 tax cuts and other provisions will play out leave a lot to be ironed out. It turns out that the controversial 2017 Republican tax cut (H.R. 1) will also impact employee benefits and fringe benefits.
- It limits the tax deductions that employers can claim for certain employee benefits. As a result, employers may revisit their offerings.
- Employers with 50+ full-time equivalent employees must still offer their full-time workers Affordable Care Act-compliant health coverage.
- Beginning in 2019, the individual tax penalty for not having health insurance goes down to $0. Some benefit program administrators say that this will result in healthy individuals opting out of employer coverage, spiking employer premiums.
- ACA reporting is still required for 2017 and the foreseeable future.
- Beginning in 2018, employers will no longer be able to deduct qualified mass transit and parking benefits for employees unless they’re necessary for ensuring employee safety. Employers tend to offer these benefits to remain competitive, out of necessity in urban areas, and to comply with state or local laws.
- Eligible employers can claim a tax credit equal to a percentage of wages paid to employees taking leave under the Family and Medical Leave Act (FMLA).
- For employers offering a 529 educational savings plan, it will soon be permissible to use funds from that account to pay for elementary, high school, and college tuition and related expenses.
- For employers that help cover employees’ moving expenses, the act suspends both the business tax deduction and the individual’s ability to deduct moving expenses from their taxable income. This rule will be in effect from 2018 through 2025 except for certain active-duty members of the military. Job-related moving expenses paid for by individuals and not reimbursed by an employer will be taxable.
- Funds used to pay for on-site gyms will be treated as unrelated business taxable income.
- Beginning in 2026, employer costs for providing food and beverages to employees through an onsite café will not be tax deductible.
- Beginning January 1, 2018, individuals’ miscellaneous itemized business deductions are no longer allowed. In other words, if employers don’t reimburse employees’ business expenses, employees can’t claim a tax deduction for those expenses.
ERISA Fiduciary Rule Delayed
The Fiduciary Rule would require financial advisors, and more specifically brokers, to put individuals’ interests above their own profits/commissions when working with retirement accounts. It was slated to go into effect on April 10, 2017, but was halted by an executive order from President Trump.
The U.S. Department of Labor (DOL) recently extended its non-enforcement policy until July 1, 2019 and plans to propose a new streamlined class exemption under the Fiduciary Rule.
Some industry insiders have speculated that the delay proceeds a political desire to more fully revise or repeal the Fiduciary Rule. The DOL will coordinate with the Securities and Exchange Commission (SEC) on the SEC’s examination of the standard of conduct applicable to investment advisors and broker-dealers.
In any case, during the 18-month delay, the rules and standards currently in effect during the initial transition period remain unchanged. Through July 1, 2019, the DOL will not enforce the Fiduciary Rule for financial fiduciaries who satisfy the Best Interest Contract Exemption (BICE) or the Principal Transactions Exemption, but don’t comply with the arbitration limitations that require Individual Retirement Account (IRA) owners to waive their rights to bring or participate in a class action lawsuit.
Social Security Base Wage Up to $128,700
For 2018, the maximum wage base for social security taxes will be $128,700, up from $127,200 in 2017. The U.S. Social Security Administration made this adjustment to reflect increases in employee wages. It will affect 7% of the 175 million workers who pay social security taxes in 2018.
The wage base is the max amount of an individual’s gross income that can be subject to social security taxes for employers and employees. Under the new wage base, the max social security tax will be $7,979.40.
Remember employers withhold 2 separate taxes from employees’ paychecks — one is the Social Security tax, and the other is the Medicare tax. This Federal Insurance Contributions Act (FICA) tax consists of a 6.2% social security tax on the employee’s earnings up to the wage base, plus a Medicare tax of 1.45% on all earnings.
“Hands Off, Pants On” in Chicago
As of January 7, 2018, most provisions of the “Hands Off, Pants On” ordinance in Chicago went into effect. The law is intended to better protect the city’s hospitality workers from sexual harassment and assault.
Hotels in the city will have until July 1, 2018 to adopt a panic button system to alert others to improper conduct. All employees who work alone in guest rooms or restrooms will be equipped with a panic button or another notification device. When pressed, it will summon hotel security or management for help in the event the employee comes in contact with an ongoing crime, sexual harassment or sexual assault situation, or another emergency.
Under the provisions now in effect, Chicago hotel employers must have an anti-sexual harassment policy in place and are forbidden from retaliating against employees who use the panic button for reasonable suspicion of a harassment incident. Nor can employers disparage an employee who discloses, reports, or testifies about any violation of the ordinance.
Hotels found to not be in compliance with the ordinance face $250-500 in daily fines for each violation of the ordinance.
New Paid Safe Time Law in Prince George’s County
Starting May 24, 2018, employers in Prince George’s County, Maryland will need to comply with Bill Number CB-87-2017, allowing covered employees to accrue and use paid leave for absences connected to domestic violence, sexual assault, or stalking.
Covered employers are those with 15 or more employees and anyone who works in the county is considered a covered employee.
- Employees can use leave for themselves or to help a family member (a child, grandchild, grandparent, parent, sibling, or spouse).
- Employees must accrue at least one leave hour for every 30 hours they work in the county.
- At the end of each calendar year, accrued, but unused leave must carry over to the next calendar year, but employers may cap carryover at 40 hours
- Employers can permit employees to front load their safe time lean instead of accruing it.
- Leave can be used to obtain medical attention to recover from a physical or psychological injury, to obtain services from a victim services organization, or to obtain legal services, including preparing for or participating in a civil or criminal proceeding.
- Employers may cap annual leave use at 64 hours per calendar year.
- Employees must request leave as soon as practicable, must comply with reasonable notice procedures, and must notify their employer how long they anticipate being out.
- If an employee uses more than 3 consecutive days of leave, employers may require the employee to provide reasonable documentation, excluding information that violates the Social Security Act or Health Insurance Portability and Accountability Act (HIPAA).
- Leave is paid at the same rate as the employee normally earns. Tipped employees must be paid at least the county’s minimum wage for each leave hour used.
- It isn’t yet specified if an employee must be paid the value of accrued, but unused leave when employment ends.
- If an employee is rehired to work in the county within 12 months of leaving an employer, any previously accrued, but unused leave must be reinstated.
- Employers will need to notify employees they are eligible for safe time leave, how leave is accrued, permissible uses, anti-retaliation provisions, and employee rights to file a complaint with Maryland’s Human Relations Commission.
- On each pay stub, employers must indicate how much leave an employee has accrued.
Victims of Domestic Abuse Leave Began January 1, 2018
Senate Bill 361 went into effect on January 1, 2018. It amended Nevada Revised Statutes, Chapters 608 and 613 and requires Nevada employers to grant leave to employees who are the victims of domestic violence or whose family or household members have been the victims of domestic violence.
Family Paid Leave Act in Effect January 1, 2018
As of January 1, 2018, New York started phase 1 of what’s expected to be the most comprehensive paid family leave law in the country. In 2018, eligible employees can take up to 8 weeks of paid, job-protected leave to care for a family member with a serious health condition, to bond with a child during the first year after the child’s birth, adoption or foster care placement, or for any qualified exigency arising from a family member’s call to active military service.
When fully implemented over the course of the next 4 years, the maximum leave amount will be up to 12 weeks. Paid leave benefits are funded through employee payroll deductions. Employers then use those deductions/money to purchase a paid family leave insurance policy or they can choose to self-insure.
- Fischer Phillip’s “A Primer on New York’s Impending Paid Family Leave: Are Employers Prepared?
- New York State Paid Family Leave website
Sick Time Law in Effect
S.B. 299, which clarified and amended Oregon’s paid-sick-time law went into effect January 1, 2018.
Among other things, the amendment clarified that employers can limit employees’ accrual of paid or unpaid sick time to 40 hours per year.
- KPA’s November 2017 HR Regulatory Updates — See Oregon, “Updates to Paid Sick Time Law”
- Oregon Sick Time website
No Firearms Notice Grace Period Ends
In Tennessee, employers can prohibit employees and other individuals from possessing weapons on employer property. However, individuals with lawful handgun carry permits can store their weapons in their personal vehicles parked on employer property.
With revisions to the law that went into effect on July 1, 2016, employers needed to post new signs that contain the following elements:
- The phrase, “No Firearms Allowed,” at least one inch high and eight inches wide;
- The words “As authorized by T.C.A. §39-17-1359” (in any size as long as it is “plainly visible”); and
- A picture of a firearm inside a circle with a slash symbol over the firearm, at least 4 inches high and 4 inches wide with the diagonal slash at a 45° angle from the lower right to the upper left of the circle.
There was a grace period until January 1, 2018 for Tennessee employers to replace their old signs with new signs that meet the revised requirements.
Paid Sick Leave Started January 1, 2018
Washington voters approved Initiative 1433 (I-1433) back in November of 2016. It increased the state’s minimum wage and created paid sick and safe leave for nonexempt Washington employees. It officially went into effect on January 1, 2018.
Seattle Sick Leave Changes
Even though the City of Seattle changed portions of its Paid Sick and Safe Ordinance law on December 15, 2017, they still went into effect on January 1, 2018.
- Applies to all Seattle employers.
- Employers cannot require employees to find someone to cover their shifts.
- The “eating and drinking establishment” exception was eliminated.
- The waiting period to use sick leave was reduced from 180 days to 90.
- Waiving sick leave agreements between employers and employees are no longer allowed. After December 31, 2018, they will be permitted again.
- Employers can’t cap an employee’s annual use of paid sick or save leave. Employers may only cap the annual carryover.
- Employees can use sick leave to care for any age child, siblings, or grandchildren, in addition to other covered family members.
- Exempt employees are included in the coverage. Employers don’t have to credit to credit paid sick and safe time beyond a 40-hour work week.