With 2016 coming to a rapid close and 2017 quickly approaching, it is crucial to keep in mind some of the changes to take affect pertaining to labor-related issues and year-end employment reporting.
•As you may recall, on April 4, 2016, New York Governor Andrew Cuomo signed a law which will gradually increase the minimum wage in New York State from the current rate of $9/hour to $15/hour by the end of 2018 for New York City and 2021 for the surrounding counties. Beginning on December 31, 2016, minimum wage is set to increase to the following:
NYC – Big Employers (of 11 or more) – $11.00
NYC – Small Employers (10 or less) – $10.50
Long Island and Westchester – $10.00
Greater New York State – $9.70
•The US Department of Labor had announced a new rule that would extend overtime protection to millions of workers who are currently exempt, including employees who meet certain tests regarding their job duties and earn less than $455 per week. As previously reported, these new overtime pay rules were suspended on November 22nd. The judge did not make a final ruling on the case, and has only issued a temporary injunction. Below lists the anticipated changes that were originally to take effect on December 1, 2016. We will keep you updated on future developments in the law.
While the job requirements have not changed, the salary level required for the exemption would have been increased to $913 a week. This is an annual change in wages from $23,660 to $47,476.
In addition, the new rule would increase the threshold salary level for highly-compensated workers. Under the previous rule, such workers were exempt from overtime pay if their annual compensation was under $100,000 and they performed certain duties. The new threshold would increase to $134,000 per year while the duties remain the same.
•The IRS has not changed the mandates for reporting health benefits on Form W-2. Employers with more than 250 W-2 employees are still required to report the cost of coverage for employer-sponsored group health plans in Box 12 of Form W-2 using code DD.
•Any fringe benefits provided to an employee are subject to employment taxes and must be included in the recipient’s taxable wages in Box 1 of Form W-2. This may include group term life insurance benefits over $50,000, employee use of a company automobile and medical insurance for an S Corp shareholder with ownership of more than 2%.
•Employers pay both Federal (FUTA) and State (SUI) Unemployment Insurance taxes on wages paid. The FUTA tax rate is 6.0% for 2016, however, employers receive an offsetting credit of 5.4% for payment of state UI taxes. This makes the effective FUTA rate 0.6%. The State UI wage base is the portion of remuneration subject to contribution. On January 1, 2017, the NYS UI wage base will increase from $10,700 to $10,900.
•Employers are still required to have a Form I-9 for each newly hired individual for employment in the United States. This form is used to verify the identity and employment authorization of the employee. It is to be completed by both the employee and the employer. U.S. Citizenship and Immigration Services (USCIS) have released a new version of Form I-9 that must be used beginning January 22, 2017. Notable changes on the newly revised form include:
Easier to complete on a computer including drop-down lists
Addition of prompts to ensure information is entered correctly
Ability to enter multiple preparers and translators
A dedicated area for including additional information
A supplemental page for the preparer/translator
•Form 1095-C for employer provided health insurance is required to be provided to employees by January 31, 2017, the same day Forms W-2 and 1099 are required to