2020 Federal Employment Law Updates of Note

By December 16, 2019 January 20th, 2020 Newsletter

Employment law is always changing. It can be hard to keep up and filter out what is important to your organization and what is not. Below are a few items to be aware of, if you are not already. As always, contact us with any questions or concerns.

FLSA: New Salary Threshold (1/1/20)

To be exempt from overtime under the federal Fair Labor Standards Act (FLSA), employees must be paid a salary of at least $35,568 and meet certain duties tests. If they are paid less or do not meet the tests, they must be paid 1.5 times their regular hourly rate for hours worked in excess of 40 in a workweek.

FLSA: Beware of Liability When Not Paying Trainees for Orientation Time

Federal law provides that once an individual becomes an employee, they are entitled to be paid under the Fair Labor Standards Act (FLSA). However, the law can be a bit unclear about compensation to trainees who are undergoing orientation activities and studying to pass tests necessary for employment. Remember, if you’ve hired them, you are required to pay them for time they spending training.

IRS Overhauls Form W-4 for 2020 Employee Withholding

On December 5, the IRS released the long-awaited final version of the 2020 Form W-4. This new version has some major revisions that should make it easier for employees to make accurate income-tax withholding decisions. These changes are intended to simplify the withholding decision and help employees better judge how much they expect to pay in taxes and/or receive back as a tax refund. The new form should also assist with those employees who have multiple jobs and are two-earner families.

There are five main points that employers should take notice of. Here is what the IRS wants you to know:

  1. All new employees hired on or after Jan. 1, 2020 must complete the new form.
  2. Current employees are not required to complete a new form but can choose to adjust their withholding based on the new form.
  3. Any adjustments made after Jan. 1, 2020, must be made using the new form.
  4. Employers can still compute withholding based on information from employees’ most recently submitted Form W-4 if employees choose not to adjust their withholding using the revised form.
  5. A new Publication 15-T, Federal Income Tax Withholding Methods, to be released in mid-December for use with the new 2020 Form W-4, will include steps employers can take to determine federal withholding.

“The primary goals of the new design are to provide simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors,” IRS Commissioner Charles Rettig said. These changes also reflect the tax code changes brought about by the Tax Cuts and Jobs Act which took effect last year.

Where to go for more information

The American Payroll Association (APA) has drafted a sample letter that you can adapt and use to explain the new form to your employees. https://www.americanpayroll.org/docs/default-source/2019-forms-and-pubs/19m12-2020_form_w-4_letter.pdf

The IRS has also updated it’s IRS Tax Estimator. This can be a helpful tool for all employees, especially if they are facing some changes in jobs, income, marital status or dependents. Help can be found here: https://www.irs.gov/individuals/tax-withholding-estimator

The IRS has more information available to help with the new form and answer some frequently asked questions. https://www.irs.gov/forms-pubs/about-form-w-4

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