The year 2020 brings more than just a new decade, it brings a new crop of laws. From legalized marijuana in Illinois to California’s new laws regarding freelance employees, there are multiple laws that could impact your business’s finances. According to a survey by ComplyRight, only one in four businesses are “very confident” in their full awareness of employment laws and regulations at the federal (23%), state (26%) and city/county (29%) levels. This is lower than in previous years.
Even if these new laws don’t directly affect you, consider the indirect effect they might have on your customers. For some companies, the increased labor costs that result could cause significant financial strain. Will they still be able to pay your invoices?
To help you be more confident, here are 3 new federal laws on which you might want to make sure you are up to date.
More People Get Overtime
Updating the 2004 law, the U.S. Department of Labor has enacted new laws for executive, administrative, and professional employees who were previously exempt from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements. As of Jan. 1, 2020, people earning $684 per week are exempt from the FLSA requirements. In the past it was $455 per week. The Department of Labor also raised the salary threshold from $100,000 per year to $107,432 per year.
Retailers, restaurants and manufacturers are likely to be affected the most by the new rules since shift supervisors and assistant managers are among the positions that must now be paid overtime after 40 hours a week.
If you’re in California, you’ll also want to make sure that you’re aware of all the new laws concerning the increased minimum wage and reclassification of contract employees. Several other states have also increased the minimum wage including Illinois, Maryland, Massachusetts, New Jersey and New York. Later in the year Connecticut, Oregon and Washington, D.C., and some counties and cities will also raise their minimum wage. Even if you do not have minimum wage employees, rising minimum wages often mean rising wages for everyone, in order to stay competitive.
The Internal Revenue Service has not changed the W-4 forms that employees use since 1987, until now. According to the IRS, the new form is less complex and more transparent. Anyone hiring people in 2020 will need to use the new form. If you have employees who want to change their withholding, they will need to do so using the new form.
If you do not use an automated payroll service, the IRS has created a calculator to help you figure out withholding for the new forms.
New Health Plan Possibilities
As of 2020, a former IRS mandate stating Health Reimbursement Arrangements (HRAs) can now be integrated with individual health insurance plans or Medicare. The decision is seen as a way that more small business employers can provide insurance to their employees.
If you need more help learning and understanding the new laws, we know plenty of great lawyers we can recommend. And of course, we’re here to help you with any financial issues you run into regarding collections. Feel free to reach out and let us know how we can help.