Will your business be impacted by legislative reforms and regulatory changes in 2018? This list of the most significant changes will help you keep pace with the issues most likely to affect you.
- Tax Reform. In the final weeks of 2017, the GOP passed the first major tax overhaul in decades. It happened quickly, leaving businesses to catch up quickly as new provisions go into effect for 2018. The vast majority of U.S. businesses are pass-through entities, which utilize the Tax Code and will therefore be directly impacted by its changes. To reduce the tax burden for such entities, Congress added a reduction of business income of up to 20% for pass-through. However, taking advantage won’t be a simple matter for some – there are complex requirements which may evolve over time. It’s an area that my firm will be watching closely. Note that the tax reform also means employers will have to implement withholding changes according to the IRS’s updated tables.
- Tax Reform and the ACA. Under the Affordable Care Act, individuals must prove that they have qualified health insurance coverage or qualify for an exemption on their tax returns – or face a penalty from the IRS. However, the recent tax reform bill negates the individual mandate penalty, reducing it to $0 by 2019. Even though the tax bill doesn’t repeal the provision, negating the penalty essentially has the same effect. The IRS says it won’t delay individual tax returns that don’t include the taxpayer’s health insurance information, other ACA provisions remain unchanged, such as the employer shared responsibility provision. What does this mean for employers? Do your due diligence in preparing for the current year ACA filing obligations, as well as in collecting tax year data for 2018 for next year’s filing.
- Ladies and Gentlemen: Equal Pay? The EEO-1 Form, which would have required covered employers to report wages and hours worked, was supposed to have been revised for 2018. However, those changes were stayed by the Office of Management and Budget in 2017. However, employers still need to submit EEO-1 form for the fourth quarter of 2017 by March 31, 2018. What’s not yet known is whether or not the new appointees of the EEOC will even look at the employer wage data as they consider their strategic plan for fiscal years 2017-2021, which looks at gender-based pay discrimination enforcement.
- State-Run Retirement Plans. So far, nine states have enacted laws allowing for state-run retirement savings plans. Details and employer requirements vary by state. They may operate either as a Roth IRA, a multiple employer plan (MEP), or as a marketplace from which plans can be chosen. In some cases employees are automatically enrolled; in some cases, enrollment is entirely voluntary. Oregon is ahead of the pack with its OregonSaves program. In the case of some larger employers, registration deadlines began in November of 2017. States looking at roll-out in 2018 or 2019 include: California, Connecticut, Illinois, Maryland, Vermont, and Washington. States that have not yet specified a rollout date include: Massachusetts and New Jersey. 22 other states and municipalities have introduced legislation that supports the creation of state-run programs. If your business does not offer retirement plan benefits to its employees, you’ll want to keep an eye on developments for your state.
- Overtime. In 2018, we can expect more developments around the Final Overtime Rule released by the Department of Labor under the Obama administration. Just this past summer, the U.S. Department of Labor solicited public comment on existing regulations, a step in the process of revising overtime regulations.
- Paid Leave. There’s been a lot going on lately at the state and local level around paid sick leave, and there will be more to come in 2018 – particularly around family paid leave. More than 40 states and local jurisdictions have already passed sick leave laws that apply to private employers. In 2018, New York is expected to lead the way with the most comprehensive family
leave laws in the U.S. What’s inside paid leave laws that matters to businesses like yours? Provisions related to things like:
Employer coverage, Employee eligibility, Notice requirements, Recordkeeping, Employer taxes Penalties, Employee payroll deductions. There will also be a need to coordinate with related federal laws, like the Family and Medical Leave Act. Additionally, the Workflex in the 21st Century Act, if passed by Congress, could preempt many paid leave laws at state and local levels, in cases where employers voluntarily offer paid leave and flexible work schedules as prescribed in the legislative proposal. - Verifying Employee Identity. In 2017, revisions were made to Form I-9, the “Employment Eligibility Verification Form”. This form is used to meet the federal requirement of verifying an employee’s identity and eligibility to work in the United States. Employers must be sure to: Use the correct form and Provide the complete form – including all instruction pages – to the employee on their first day of work. Employers are also being warned by Immigration and Customs Enforcement that 2018 will see a spike in worksite inspections. Additionally, the current I-9 form could be phased out and replaced by an e-verify system, depending on what happens with the Legal Workforce Act which was introduced last year.
- New, Quicker Modes of Payment. The second phase of Same Day ACH – which allows for debts up to $25K – became a payment option in September of 2017, boosting cash flow management. Throughout 2018, small businesses will find it easier to leverage faster payment options as they become more simplified and available. In March 2018, for Same Day ACH funds availability, financial institutions will be required to meet a deadline of 5:00 p.m. local time. Also in 2018, it’s expected that more realtime payment solutions will be available, which will be important to those involved in the rising gig economy. Quicker, easier options for tipping employees are also anticipated. As faster payment opportunities become available, businesses will want to work with their financial institutions, payment processors and vendors to take advantage of the most suitable new options.
- Privacy & Security. Is your business doing enough to protect sensitive information? Recovery from a security breach can cost a fortune, destroy your reputation, even get you sued. Add to those worries the regulatory risks. Businesses with inadequate security leading to data breaches are subject to investigations and legal action from states’ attorneys general and federal regulatory agencies, such as the Consumer Financial Protection Board and the Federal Trade Commission. State agencies in Colorado and New York have already enacted cybersecurity rules, and they’re making other states consider regulating and enforcing data security standards against insurance and financial services businesses. We may also see the introduction of national privacy standards for the collection and use of data from biometric technology, as we’re already seeing in Illinois, Texas and Washington.
