There were a few important alerts announced this month that change federal compliance for human resource management that may affect your company. We thought it was worth going through the announcements one more time.
FUTA Credit Reduction Eliminated for Ohio and Connecticut Employers in 2016
The Federal Unemployment Insurance Tax Act (FUTA) is a tax paid by employers in states where a Federal Unemployment loan needed to be used to pay unemployment benefits. This increased annual taxes up to $147 per employee for employers within effected states. However, this year both Ohio and Connecticut repaid their outstanding advances before November 10, 2016 thereby eliminating the FUTA Credit Reduction for 2016.
This early payoff means employers in Ohio and Connecticut will see no additional funds collected in December for the FUTA Credit Reduction. Without this early payoff, Ohio employers were scheduled to see an additional 1.8% per employee in FUTA taxes. This will leave only California and the Virgin Islands with outstanding federal UI loans and 1.8% elevated FUTA taxes for 2016.
FLSA Federal Overtime Rules On Hold
On Tuesday, November 22, 2016 a federal judge, Amos Mazzant III, for the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction on the Department of Labor's (DOL) new overtime rules. The rule, originally slated to go into effect December 1st, would have raised the threshold for overtime pay from $23,660 to $47,476. Judge Mazzant ruled that the DOL likely overstepped its authority by:
- Raising the salary threshold as high as it did, and
- Implementing an automatic increase every three years
The ruling comes from consolidated lawsuits filed by several business groups and a coalition of 21 states. The DOL has issued a statement disagreeing with the court’s decision and have indicated they may decide to appeal the ruling.
What this Means for Employers
A final ruling has not been made in the case and we don’t know when a final decision will be issued. We also don’t know if the rules will be thrown out or if the final decision will allow for a compromise on some aspects of the rule.
We are keeping a close eye on this case and will keep you updated as more information is available. In the meantime, here are some things to keep in mind as you consider moving forward on changes to employee salaries:
- How will the changes impact your organization’s bottom line?
- If you have begun implementing changes based on the new rules, what has been implemented or communicated to staff? What are the implications of rolling that back now?
- What, if any, effect will changes have on staff and staffing?
- Is the new pay structure better from a procedural or accounting perspective?
Are you prepared to be responsive if the final decision raises the minimum overtime threshold?
More questions? Feel free to contact us.
IRS Extends ACA Reporting Date to Distribute Forms 1095-C/1095-B
Employers subject to the Affordable Care Act's information reporting requirements now have extra time to give forms to employees. The IRS has extended its deadline for some employers to distribute IRS Form 1095-C / 1094-B from January 31 to March 2, 2017.
Who Does This Apply To
Applicable large employers (ALEs) that employed 50 or more full-time or full-time-equivalent employees are required to report information about the health coverage they offered or did not offer to certain employees in 2016. To comply with this requirement, ALEs will need to provide form 1095-C to current and/or former employees and file copies (with transmittal form 1094-C) with the IRS.
Any employer who offered a self-funded health plan, regardless of size, is required to report health coverage information about plan enrollees. Employers with self-funded health plans will need to report coverage information on form 1095-B to current and/or former employees and file copies (along with transmittal form 1094-B) to the IRS.
The extension gives employers more time to collect data and prepare forms. But keep in mind the extension only applies to the forms that are distributed to individual employees. The deadline to file forms with the IRS has not been extended (February 28, 2017 for paper filing and March 31, 2017 for electronic filing).
** The IRS has also extended "Good Faith Transition Relief" to 2016. You may not be penalized for incorrect or incomplete data reported if you can show you made a good faith effort to comply with the reporting requirements.
New I-9 Released November 14, 2016
The U.S. Citizenship and Immigration Services (USCIS) released an updated I-9 form on November 14 and is ready for use. The old form (marked as expired on March 31, 2016) remains valid through January 21, 2017. The new form can be use now, but there are a couple things to note:
- The new I-9 is intended to be completed as a fillable PDF, it will still need to be printed, signed and retained for the proper period. This is not the same thing as an electronic version. If you use an electronic version be mindful of the integrity of the system as it must comply with the U.S. Citizenship and Immigration Services' criteria.
- Do not revert current employees to the new form. Use the new I-9 for new hires and when you are reverify temporary work authorization.
- The form must be retained while the employee works for you and for three years after their hire date or one year after their termination date, which ever is later.
- Download the form from the USCIS website. right click on the link to the new form right click on the link to the new form—“Form I-9 (PDF, 535 KB)” – and select the “Save link as” option. Clicking to open it in a web browser (as you would with most links) will result in an error page.