#1 Tax Reform: In December 2017, the GOP passed the first major tax overhaul in decades which will affect how you file taxes for 2018. The corporate tax rate will be streamlined to a flat 21 percent. The standard deduction was nearly doubled. Employers will need to implement the new withholding tables for current W-4 employees by February 15, 2018. https://www.irs.gov/pub/irs-pdf/n1036.pdf Many people claim Congress finally threw a bone to small businesses, by added a deduction for business income for pass-through entities of up to 20 percent, but there are complex income requirements and restrictions to leverage this deduction. Small businesses should carefully watch how this policy evolves.
#2 State Reaction to Federal Tax Reform: State taxing authorities are scrambling to position themselves to handle changes brought on by federal tax reform. Many states are working on new state laws to lessen the effect of the federal tax cuts on state revenues and taxes. Stay tuned for how your state with implement and conform to the new law.
#3 The Affordable Care Act (ACA): The ACA filing obligations and shared responsibility provision for employers remains the law of the land. Under the ACA, individuals must demonstrate they have qualified health insurance coverage or qualify for an exemption on their tax returns, or face a penalty from the IRS. The tax reform bill eliminates the individual mandate penalty by 2019. However, the IRS requires self-insured employers and insurers to report individuals covered by their plan or face penalties. Remember the Employer Shared Responsibility Provision of the Affordable Care Act penalizes employers who either do not offer coverage or do not offer coverage which meets minimum value and affordability standards. These penalties apply to firms with 50 or more full-time equivalent employees.
#4 Paid Leave Laws. Over 40 different states have passed paid sick leave laws applicable to private employers, which will create an additional HR administrative costs to manage for eligible employees and potential tax burden for employers. Most of these leave laws require a maximum of 3 sick days to be provided for your employees. It’s time to review your leave policy in your organization. If you already provide PTO(Paid Time Off) it may meet the sick time standard. There is also a need to coordinate these laws with other leave laws such as the federal Family and Medical Leave Act (FMLA).
#5 Employee Verification. Form I-9, the Employment Eligibility Verification Form, which is used to meet the federal requirement to verify an employee’s identify and eligibility to work in the U.S., was revised in 2017. Employers will still need to ensure use of the correct form and delivery of the separate instruction pages to all new employees on their first day of employment. Immigration and Customs Enforcement has warned that it will quadruple the number of worksite inspections in the coming year. Also of concern is the E-Verify program. 22 states now require all or some of their businesses to take the additional verification step and process I-9’s through the E-Verify program. Pay attention to your local state laws and govern yourself accordingly.
#6 Overtime Regulations. Activity related to federal overtime regulations will continue in 2018, despite being including white collar employees being struck down by a federal court in 2017. While employers are reminded to continue their compliance with the existing federal overtime regulations, as well as applicable state requirements that may incorporate salary levels that exceed the federal level, new federal overtime regulations could be adopted and in place by early 2019. For now, the salary basis test remains at $455 per week to make an employee exempt from overtime pay. But the employee must also pass one of the essential duties tests as well.
#7 Pay Equity. The issue of gender-based pay discrimination enforcement is in play at the federal level It remains to be seen if the EEOC, with its newly appointed members, will choose to revisit the collection of employer wage data as they move forward with their Strategic Enforcement Plan for Fiscal Years 2017-2021. But pay discrimination based on gender also continues to be an area of great concern for states looking to more aggressively ensure pay equity in the workplace. Some local jurisdictions, will likely continue to push through legislation this year to ban or limit the practice of using salary and benefits history information in the hiring process.
#8 Privacy. Small- to medium-sized business owners must fortify their cybersecurity programs. Businesses that do not use and privacy safeguards face regulatory and legal risks, as well as crushing remediation expenditures. Additionally, with the increased adoption of biometric technology in the private sector, privacy laws regulating the collection and use of biometric data, such as those in Illinois, Texas, and Washington, may become nationwide industry standards. Sensitive and Medical information on your employees must be kept at the ”level of negligence”, which is the double locking rule. This means that paper files must be kept in a locked room and in a locked file cabinet, and electronic files must be kept in a password protected folder.
#9 State and Municipality Retirement Plans. No one is saving enough for retirement, with social security facing financial challenges many states are considering implementation of state-run retirement savings plans. At present, nine states have enacted laws that allow the development of these programs. Each state’s program is structured as a Roth IRA, a multiple employer plan (MEP), or a marketplace whereby users can comparison shop for plans. Employer requirements vary by state, with some requiring employer participation based on employer size and others keeping employer participation voluntary. Auto-enrollment of employees is also a state-specific provision. Nearly two dozen states are working on these kinds of programs, the state of Oregon’s plan is the furthest. Businesses not currently offering their employees a retirement plan will need to watch individual state developments closely.
#10. Payment Evolution. Cash flow management will be easier in 2018 as Same Day ACH will continue to expand for small businesses. In March of 2018, financial institutions will be required to meet a strict 5 p.m. local deadline for Same Day ACH funds availability. Near real-time payment solutions are also expected to be available in 2018. Small businesses should work closely with their banking institutions, merchant processors, and vendors as the availability of faster payments develops.
About the Author:
Oginga Carr is an author, national seminar leader, organizational structure expert and Human Resource consultant. He brings 17 years of experience in Sales, Management, and Organizational Development. Want to know how to triple productivity in your business? The IDIA Live: The Business Blueprint event is for you! Meet Oginga in Memphis, TN March 8-10, 2018 for the ULTIMATE business conference! Get you tickets here: www.idialive.com