The IRS has substantially redesigned the Form W-4 to be used beginning in 2020.
All new employees first paid wages during 2020 must use the new redesigned Form W-4. In addition, employees who worked for an employer before 2020 but are rehired during 2020 also must use the redesigned 2020 Form W-4.
Continuing employees who provided a Form W-4 before 2020 do not have to furnish the new Form W-4. However, if a continuing employee who wants to adjust his/her withholding must use the redesigned Form.
The IRS has issued the following FAQs for employers about the redesigned 2020 Form W-4:
Are all employees required to furnish a new Form W-4?
No, employees who have furnished Form W-4 in any year before 2020 do not have to furnish a new form merely because of the redesign. Employers will continue to compute withholding based on the information from the employee’s most recently furnished Form W-4.
Are new employees first paid after 2019 required to use the redesigned form?
Yes, all new employees first paid after 2019 must use the redesigned form. Similarly, any other employee who wishes to adjust their withholding must use the redesigned form.
How do I treat new employees first paid after 2019 who do not furnish a Form W-4?
New employees first paid after 2019 who fail to furnish a Form W-4 will be treated as a single filer with no other adjustments. This means that a single filer’s standard deduction with no other entries will be taken into account in determining withholding. This treatment also generally applies to employees who previously worked for you who were rehired in 2020 and did not furnish a new Form W-4.
What about employees paid before 2020 who want to adjust withholding from their pay dated January 1, 2020, or later?
Employees must use the redesigned 2020 form.
May I ask all of my employees paid before 2020 to furnish new Forms W-4 using the redesigned version of the form?
Yes, you may ask, but as part of the request you should explain:
» they do not have to furnish a new Form W-4, and
» if they do not furnish a new Form W-4, withholding will continue based on a valid form previously furnished.
For those employees who furnished forms before 2020 and who do not furnish a new one after 2019, you must continue to withhold based on the forms previously furnished. You may not treat employees as failing to furnish Forms W-4 if they don’t furnish a new Form W-4. Note that special rules apply to Forms W-4 claiming exemption from withholding.
Will there still be an adjustment for nonresident aliens?
Yes, the IRS will provide instructions in the 2020 Publication 15-T, Federal Income Tax Withholding Methods, on the additional amounts that should be added to wages to determine withholding for nonresident aliens. And nonresident alien employees should continue to follow the special instructions in Notice 1392 when completing their Forms W-4.
When can we start using the new 2020 Form W-4?
The new 2020 Form W-4 can be used with respect to wages to be paid in 2020.
Florida raised its minimum wage to $8.56 an hour beginning Jan. 1, 2020, up 10 cents from $8.46 in 2019. For tipped employees, the minimum wage will be at least $5.54 an hour.
The minimum wage rate is recalculated each year on Sept. 30, based on the Consumer Price Index.
Employer found liable for intentionally violating minimum wage requirements are subject to a fine of $1000 per violation, payable to the state in addition to potential civil action law suit.
Be sure to update your required Florida Minimum Wage Posting to reflect this change. You can download a copy of the new poster here.
Earlier this week, the IRS issued Notice 2019-63, which extends both: (1) the filing deadline for Forms 1095-C and 1095-B; and (2) the good-faith reporting relief. But this year, there’s more. In limited circumstances, the IRS will not penalize entities for the failure to furnish information to individuals using Form 1095-B, and in some cases, Form 1095-C (see discussion of Section 6055 Relief below).
Notice 2019-63 extends the due date for reporting entities to furnish 2019 Forms 1095-C and 1095-B to individuals from January 31, 2020 to March 2, 2020. These forms must also be filed with the IRS (along with the applicable transmittal statement) by February 28, 2020 (if filed on paper) or March 31, 2020 (if filed electronically). Reporting entities may, however, request individual extensions to file these forms with the IRS.
The IRS may impose penalties of up to $270 per form for failing to furnish an accurate Form 1095-C or 1095-B to an individual and $270 per form for failing to file an accurate Form 1095-C or 1095-B with the IRS. As in prior years, the IRS indicated in Notice 2019-63 that it would not impose these penalties for incomplete or inaccurate forms for the 2019 calendar year (due in 2020), if the reporting entity can show that it “made good-faith efforts to comply with the information-reporting requirements.” This good-faith reporting relief does not apply to forms that were untimely furnished to individuals or filed with the IRS.
Under Section 6055 of the Internal Revenue Code (the “Code”), providers of minimum essential coverage must furnish certain information to “responsible individuals” about enrollment in the minimum essential coverage during the previous calendar year. The purpose of this reporting requirement is to assist the IRS enforce compliance with the “individual mandate” penalty under the ACA.
Under the Tax Cuts and Jobs Act of 2017, the individual mandate penalty was not repealed, but the penalty amount was reduced to zero. This makes reporting under Section 6055 of the Code irrelevant. As a result, Notice 2019-63 provides limited relief from the reporting requirements under Section 6055 of the Code.
Here is a brief summary of the Section 6055 reporting requirements:
Notice 2019-63 provides relief with respect to Forms 1095-B and limited relief with respect to Forms 1095-C. For insurers and small self-funded employers, the entity must still prepare and file the Forms 1095-B with the IRS. However, these entities are not required to furnish individuals with a copy of the Form 1095-B as long as the entity satisfies both of the following requirements:
Notice 2019-63 generally does not extend this relief to large self-funded employers, except for Forms 1095-C that are prepared on behalf of individuals who are not full-time employees for the entire 2019 calendar year. A large employer sponsor of a self-funded plan may file a Form 1095-C on behalf of an individual who was enrolled in the self-funded plan during the 2019 calendar year, but was not a full-time employee during any month of the calendar year. (For these individuals, the “all 12 months” column of line 14 is completed using the code “1G.”) Examples of where this relief may extend to Forms 1095-C are: (1) former employees who terminated employment before 2019 but were enrolled in the self-funded plan under COBRA or retiree coverage; and (2) employees who were part-time during all of 2019, but were enrolled in the self-funded plan because the plan sponsor extended eligibility for the self-funded plan to part-time employees.
While the filing deadline extension and the extension of the good-faith reporting relief is likely welcome news to insurers and employers alike, it’s probably not surprising. And, while the Section 6055 reporting relief is likely surprising, it’s probably only meaningful to insurers.
In a proposed regulation, federal agencies suggest a rule that would require employer-sponsored group health plans to provide plan enrollees with estimates of their out-of-pocket expenses for services from different health care providers. Plans would make this information available through an online self-service tool so enrollees could shop and compare costs for services before receiving care.
Comments are due by Jan. 14, 2020, on the transparency-in-coverage rule issued by the departments of Health and Human Services, Labor and the Treasury. The unpublished rule was released on Nov. 15, when the agencies also posted a fact sheet summarizing the proposal.
Some feel that the rule, if finalized, would be the most dramatic expansion of disclosure obligations for group health plans since the ERISA was passed in 1974.
The proposal is part of the Trump administration’s attempt to create price competition in the health care marketplace. It follows the November release of a final rule requiring hospitals to publish their prices online for standard charges, including negotiated rates with providers. That rule, to take effect Jan. 1, 2021, is expected to be challenged in court by hospital industry groups.
The new proposal would apply to all health plans except those that are grandfathered under the Affordable Care Act. Among other obligations, group health plans and health insurance carriers would be required to do the following:
Information about employees’ out-of-pocket expenses and cost-sharing under employer plans is already disclosed in pre-service and post-service benefit claim determinations. However, “the proposed rules would take these disclosure requirements a step further by requiring individually tailored cost estimates prior to the receipt of services,” noted Susan Nash, a partner at law firm Winston & Strawn in Chicago.
While transparency in health care pricing is generally welcomed by employers, she observed, “employers may balk at the cost of preparing the online or mobile app-based cost-estimator tools, or purchasing such tools from vendors.”
In addition, because much of the information required to be disclosed is specific to the participant and the benefit option in which the participant is enrolled, the disclosures “will require greater coordination among employers and third-party administrators, pharmacy benefit managers, [and] disease management, behavioral health, utilization review, and other specialty vendors and will require amendments to existing agreements,” Nash explained.
The rules around public disclosure will likely be opposed by health insurance carriers who view their price negotiation as confidential and part of the service that they provide as carriers, and insurers are likely to challenge them in court, as hospital systems are expected to do with the final rule on disclosing their prices.
You don’t have to spend a lot to make a big difference in your workplace. Many of the ideas below show how effective HR can be by simply helping employees relax, connect and enjoy each other’s company. And the end result….happy people are productive people.
1. Give Employees a Voice
For some companies, boosting morale and encouraging teamwork are orchestrated parts of a specific plan to give back to the community. Other companies simply gather volunteers and go for it—they hold events with the primary aim of letting employees have fun and enjoy each other’s company.
Employees at one company volunteer to serve on an engagement committee. In the past, they have proposed a variety of events, including collecting food for local charities, decorating the lobby for holidays and holding a Halloween costume contest.
Don’t let managers do the event planning. Let employees make the decisions as that helps them feel listened to.
Employees at this organization have been receptive and this has even had a positive impact on their clients. These events have reduced employee turnover to 22 percent from 36 percent in six months.
2. Encourage Friendly Competition
They’re energetic employees, and sometimes they need to blow off steam. So why not have a tug-of-war?
That’s what Symplicity Corp. in Arlington, Va., invites its employees to do periodically throughout the year.
About 30 employees gather in the parking lot, and the tug begins. They pull, they huff, they puff. Or they collapse in laughter. The game is a great diversion and has been a hit with employees.
Symplicity’s tug-of-war isn’t competitive. (Well, maybe a little bit.) Nor is it expensive: The thick, braided rope cost $70, she says, and has been re-used numerous times.
Other inexpensive events include:
Employees also are invited to movie nights, live music events and camp-outs.
The events are orchestrated by Symplicity’s “party people group,” about eight to 10 volunteers who get together each February to brainstorm events for the year.
3. Promote Healthy Living
A San Diego hotel group relayed the importance of healthy eating to its housekeeping staff by providing nutritious snacks, including apples, frozen fruit trays, salad and healthy burritos every Friday.
The hotel partnered with a community program, Live Well @ Work, to teach about nutrition in fun, positive ways.
The hotels arranged to help employees understand the ins-and-outs of nutrition labels and demonstrated, for example, how much sugar is in a bottle of soda. The organization tapped community groups and the American Red Cross to provide free recipe books and pedometers. The hotels also scheduled occasional exercise sessions for some pre-work stretches.
“Fruit Fridays” has proven to be an extremely successful program and very low-cost. Not only has it helped increase employee engagement but has definitely improved morale and provided a short break from the normal day.
4. Get Employees Moving
Talk about throwbacks. Scranton Gillette Communications runs a Tour de France tricycle race for employees. No, that’s not a typo. Tricycle race.
For the past two summers, the company’s HR department has rounded up donated tricycles and scheduled a fairly slow “race” around the office parking lot.
As employees tackle each 50-yard race to make it to the next round of competition, their colleagues staff hydration stations. To top it off, the winners take home small trophies.
The company is big into fitness programs and cheerleads for other events, too. It runs a summer challenge encouraging employees to count their steps. HR team members keep a spreadsheet to log their steps over a four-week period. Prizes are given for the most overall steps, the most improved participant and the first to reach a personal milestone, such as 50 or 75 miles.
Their HR team also sponsors a “stairmageddon,” calling on its 130 employees to count the number of stairs they climb in a day. The person who takes the most flights wins a gift card.
Other fun events include a mini-golf tournament (played in the office hallways), a Wiffle ball home run derby (scheduled to coincide with the start of baseball season), and a paper airplane contest which has employees launching their creations into an atrium from the second floor.
It’s not all about fitness, though. Employee appreciation is also shown on Strawberry Shortcake Day and Root Beer Float Day with low-cost (if not low-calorie) treats.
Employees also enjoy no-cost activities such as designated days to wear their favorite sports team jerseys.
Each employee who participates receives a raffle ticket. At the end of the month, one employee wins a $20 gift card and is featured in the next employee newsletter.
5. Communicate Clear Goals
Games and fun events can do more than just bring people together.
One of the most important things a company can do is let employees know what’s expected of them. But that wasn’t happening at Hi-Grade Welding and Manufacturing in Schaumburg, Ill. So the HR team sought ways to improve communication between managers and the company’s 116 employees.
Changes began with the purchase of two $500 televisions, one for the shop floor and another for the lobby. Each department’s goals are displayed on the TV screens, along with numbers reflecting the amount of rejected products. The quality of work has improved (and the amount of rejected products has been reduced) since the statistics have been shared openly. That simple change helped motivate and engage employees in a friendly competition with other departments to improve quality, she adds.
6. Help the Community
One of Symplicity’s most popular events is a program coordinated by the company that enables employees to volunteer at a local food kitchen.
Employees also take paid time off from work to read to children and participate in Earth Day cleanups.
7. Say Thank You
Two years ago, Jennifer, an HR assistant manager at Enertech Global LLC in Mitchell, S.D., was looking for a way to recognize the company’s 116 employees.
She glued a penny to a piece of card stock and added the words, “Just like finding a penny is good luck, we are lucky to have YOU. Thank you for everything you do every day.” As an extra touch, the plant manager signed each card.
There are people that have theirs hanging up which proves that at the end of the day, we all just want to feel wanted and appreciated.
That’s why the HR team at Clarus tries to do something special when employees are working on major projects and under a lot of stress. The HR professionals hand out small gifts along with notes expressing their thanks.
The gestures help maintain morale and let “employees know we appreciate all they’re doing for us.”
The HR team also tries to introduce a little levity into their messages to lighten the workers’ mental load. In the past, employees have received a bag of microwave popcorn with a note: “Bursting with excitement you’re on our team!” or a Mounds candy bar with the message: “Thank you for the mounds of work you’re doing!”
Other small gifts to show gratitude include:
When the company wants to commend employees for a specific effort, they place messages on an employee’s desk before they start the workday. The surprise gesture helps them start their day off on a positive note.
Seasonal office parties, complete with decorations and costumes, can be a great opportunity for employee engagement, communication, team building and simply having fun with co-workers.
However, we should recognize that things can go awry and people may have other concerns that will need to be addressed. Not all employees want to participate in decorating the office, wearing a costume or attending a party, or want to deal with decorations, costumes and behaviors that are inappropriate.
As leaders, we need to maintain professionalism in the office, even during Halloween. Workplace rules and dress code policies still need to be enforced. Here are some tips to communicate the organization’s expectations and hold everyone accountable.
The Departments of the Treasury, Labor, and Health and Human Services (the Departments) released information regarding the individual coverage HRA (ICHRA) notice requirements earlier this year.
The notice, which must be sent to all eligible employees 90 days before the benefit is offered, is primarily intended to inform eligible employees of how the ICHRA affects premium tax credits. This information will help employees make an informed decision on whether to participate in the ICHRA or opt out. It also notifies employees that a benefit is being offered and what they can expect from the ICHRA.
This highlights everything your ICHRA notice needs to include so that you’re offering the benefit in a compliant way.
When offering an ICHRA an employer must provide a notice including the following:
Note: Per the Departments, for ERISA-covered plans, other disclosure requirements may require participants to be provided with a reasonable opportunity to become informed of their rights and obligations under the ICHRA.
For new ICHRAs, including those starting January 1, 2020, businesses must adhere to a 90-day notice requirement. That means that 90 days before the ICHRA’s start date, they must send employees a notice including each of the components above and notifying them of their eligibility for the benefit. For a plan starting on January 1, 2020, businesses must provide notice to employees on or before October 3, 2019.
The 90-day notice must provided every year your business chooses to offer the ICHRA.
For newly eligible employees (newly hired employees or employees who gain eligibility after the initial start of the plan year), the timing is different. Your business can provide the notice up until the first day the employee’s ICHRA coverage begins. It’s best to provide notice as soon as possible, so the employee has ample time to review coverage options and enroll in a plan.
The Departments have provided a model notice that employers can use as a template for their notice. It’s not required that you use the model, but the Departments have advised use of the model is sufficient for good faith compliance of the requirements as long as it’s provided within the correct time frame. Whether you use the model or not, be sure to include each of the requirements listed above and send the notice within the 90-day notice period.
Prior to each year’s Medicare Part D annual enrollment period, plan sponsors that offer prescription drug coverage must provide notices of creditable or noncreditable coverage to Medicare-eligible individuals.
The required notices may be provided in annual enrollment materials, separate mailings or electronically. Whether plan sponsors use the federal Centers for Medicare & Medicaid Services (CMS) model notices or other notices that meet prescribed standards, they must provide the required disclosures no later than Oct. 15, 2019.
Group health plan sponsors that provide prescription drug coverage to Medicare Part D-eligible individuals must also disclose annually to the CMS—generally, by March 1—whether the coverage is creditable or noncreditable. The disclosure obligation applies to all plan sponsors that provide prescription drug coverage, even those that do not offer prescription drug coverage to retirees.
Background
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires group health plan sponsors that provide prescription drug coverage to disclose annually to individuals eligible for Medicare Part D whether the plan’s coverage is “creditable” or “noncreditable.” Prescription drug coverage is creditable when it is at least actuarially equivalent to Medicare’s standard Part D coverage and noncreditable when it does not provide, on average, as much coverage as Medicare’s standard Part D plan. The CMS has provided a Creditable Coverage Simplified Determination method that plan sponsors can use to determine if a plan provides creditable coverage.
Disclosure of whether their prescription drug coverage is creditable allows individuals to make informed decisions about whether to remain in their current prescription drug plan or enroll in Medicare Part D during the Part D annual enrollment period. Individuals who do not enroll in Medicare Part D during their initial enrollment period (IEP), and who subsequently go at least 63 consecutive days without creditable coverage (e.g., they dropped their creditable coverage or have non-creditable coverage) generally will pay higher premiums if they enroll in a Medicare drug plan at a later date.
Who Gets the Notices?
Notices must be provided to all Part D eligible individuals who are covered under, or eligible for, the employer’s prescription drug plan—regardless of whether the coverage is primary or secondary to Medicare Part D. “Part D eligible individuals” are generally age 65 and older or under age 65 and disabled, and include active employees and their dependents, COBRA participants and their dependents, and retirees and their dependents.
Because the notices advise plan participants whether their prescription drug coverage is creditable or noncreditable, no notice is required when prescription drug coverage is not offered.
Also, employers that provide prescription drug coverage through a Medicare Part D Employer Group Waiver Plan (EGWP) are not required to provide the creditable coverage notice to individuals who are eligible for the EGWP.
Notice Requirements
The Medicare Part D annual enrollment period runs from Oct. 15 to Dec. 7. Each year, before the enrollment period begins (i.e., by Oct. 14), plan sponsors must notify Part D eligible individuals whether their prescription drug coverage is creditable or non-creditable. The Oct. 14 deadline applies to insured and self-funded plans, regardless of plan size, employer size or grandfathered status
Part D eligible individuals must be given notices of the creditable or non-creditable status of their prescription drug coverage:
According to CMS, the requirement to provide the notice prior to an individual’s IEP will also be satisfied as long as the notice is provided to all plan participants each year before the beginning of the Medicare Part D annual enrollment period.
Model notices that can be used to satisfy creditable/non-creditable coverage disclosure requirements are available in both English and Spanish on the CMS website. Plan sponsors that choose not to use the model disclosure notices must provide notices that meet prescribed content standards.
Notices of creditable/non-creditable coverage may be included in annual enrollment materials, sent in separate mailings or delivered electronically. Plan sponsors may provide electronic notice to plan participants who have regular work-related computer access to the sponsor’s electronic information system. However, plan sponsors that use this disclosure method must inform participants that they are responsible for providing notices to any Medicare-eligible dependents covered under the group health plan.
Electronic notice may also be provided to employees who do not have regular work-related computer access to the plan sponsor’s electronic information system and to retirees or COBRA qualified beneficiaries, but only with a valid email address and their prior consent. Before individuals can effectively consent, they must be informed of the right to receive a paper copy, how to withdraw consent, how to update address information, and any hardware/software requirements to access and save the disclosure. In addition to emailing the notice to the individual, the sponsor must also post the notice (if not personalized) on its website.
In Closing
Plan sponsors that offer prescription drug coverage will have to determine whether their drug plan’s coverage satisfies CMS’s creditable coverage standard and provide appropriate creditable/noncreditable coverage disclosures to Medicare-eligible individuals no later than Oct. 15, 2019.
The suspense is over – the Department of Labor announced yesterday the revised Overtime Rule, which will set the minimum salary threshold for the Fair Labor Standard Act’s white-collar exemptions at $684 per week, or $35,568 per year. The rule, which will expand overtime pay obligations to an estimated 1.3 million additional workers, will take effect on January 1, 2020. The big question is what do you need to know about this breaking news?
It seems an eternity ago when President Obama directed the U.S. Department of Labor (USDOL) to revise the regulations governing the outdated white-collar exemptions of the Fair Labor Standards Act (FLSA). The proposal eventually released by the USDOL would have radically altered the federal compensation rules. Most notably, the agency would have more than doubled the salary threshold and applied, essentially, a formula to update the amount every three years. This minimum threshold was set to become effective on December 1, 2016, and the “updating” would begin, ironically, on January 1, 2020.
But concerned states and business groups sought to block the rule from taking effect, and, at the last minute, a federal court issued a preliminary injunction preventing the rule from being implemented on a nationwide basis. Since the Texas court put the final nail in Overtime Rule 1.0’s coffin by striking down the rule once and for all in August 2017, employers have been patiently awaiting a revised rule.
Under the current administration, USDOL leadership indicated that it would no longer advocate for the $913 per week proposal but would instead undertake further rulemaking to determine what the salary level should be. In what seemed like a painstakingly long process, the agency held public forums, issued a request for information, and sought comments on a proposed rule that, like Overtime Rule 1.0, focused solely on the pay component but without completely overshadowing the duties tests. After all, the FLSA authorizes the agency to define and delimit the executive, administrative, and professional exemptions – not supplant them. Today, finally, all of the work culminated in the release of Overtime Rule 2.0.
After the drama surrounding the last-minute injunction blocking the 2016 proposal, it would be natural for employers to feel gun-shy about adjusting to these changes. After all, isn’t there a chance that another court will once again block these changes and put us in yet another state of limbo? While there is always a chance for litigation to unfold in such a way that it would impact the implementation of this rule, there are several reasons why you should be preparing as if this rule will go into effect as planned on January 1, 2020.
First, while there is no magic number for setting the salary threshold (that’s the whole point), there is something to be said for certainty. The new rule skirts some of the more problematic areas that existed with the first attempt at revisions. The $684 per week threshold will require the reclassification (or pay increases) of some employees, but a far less significant portion than would have seen increases had the $913-per-week proposal of three years ago was adopted.
Second, while the rule contains some of the same flaws as Overtime Rule 1.0, they generally are not the kinds of concerns that were previously raised in lawsuits. Employer advocates will have more difficulty taking the position that this particular threshold eclipses the duties tests. Likewise, while employee advocates might feel that the threshold is set at too low a level, meeting the pay component does not make someone exempt in and of itself, so this argument is more philosophic in nature and may not warrant the rule being blocked.
Finally, the USDOL must be well prepared at this point to defend the rule. Even aside from the litigation, it has received voluminous public feedback on an increase from $455 per week numerous times, including those shared in 2015, 2017, and 2018. So, while litigation seems inevitable, employers should not be idle in preparing for this rule to take effect.
As recounted above, the drama surrounding Overtime Rule 1.0 was a painfully long process for employers as they waited to see what might happen. The best practice, though, is to assume Overtime Rule 2.0 is the real thing. That said, you should not run out tomorrow and make immediate changes to your compensation structure. Instead, you should use this time to start evaluating not just whether changes will be necessary, but how best to make those changes (timing, communications, etc.).
If you made changes in 2016 in anticipation of the $913 per week threshold, you are certainly ahead of the curve. If you did some of the work but decided to wait to implement once the preliminary injunction was put in place, you also have a great head start. Nonetheless, in both cases, you must keep in mind that three years have passed and it is possible that an employee’s work has changed in the interim.
It is imperative to confirm your prior findings at least for any employee that might receive a salary increase to qualify for exempt status under Overtime Rule 2.0. No employee is automatically entitled to be treated as exempt; in contrast, increasing the salary for an employee that does not meet the duties tests can only make matters worse.
Right now, you should begin: