One of the biggest political developments last year was the passage of Tax Reform. In addition to changes to credits, deductions, and business tax rates, the tax reform law changes the way employers calculate wage withholding for their employees.
For this reason, the IRS has released an “early release draft” of the 2019 IRS Form W-4, which incorporates a number of changes resulting from tax reform as well as the new withholding requirements. The agency has also updated their website with information on how tax reform effects taxpayers and businesses.
A recent compromise between the business community and advocacy groups in the Bay State has resulted in “Grand Bargain” compromise legislation that the Governor signed into law at the end of June.
There are three major items that significantly affect Massachusetts employers: an increase in the state minimum wage to $15.00 per hour, a sales tax compromise, and the creation of a new state paid family and medical leave program.
The law provides a complete legal defense for employers that have conducted a good-faith and reasonable self-audit of its pay practices. The employer must complete the self-audit within the three year period prior to the initiation of a claim. To use this defense, the employer must demonstrate that, as a result of the self-audit, reasonable progress has been made toward eliminating any wage differentials based on gender for comparable work.
CheckWriters has built a pay equity evaluation tool into our platform which will help employers in Massachusetts conduct a self-audit in order to determine whether your organization is paying men and women the same.
The Massachusetts Equal Pay Act (MEPA), passed in 1945, was the first state law of its kind. But it hasn’t provided enough detail to be useful to employees or stiff enough penalties to be compelling for employers. The amendments to MEPA, which take effect July 1, 2018, make the law significantly more relevant. There are important action items for employers in the state:
The Massachusetts Pregnant Workers Fairness Act (PWFA) was signed into law in July 2017; it provides various protections for applicants and employees who are pregnant or lactating. The law requires that employers provide notice to their workers by April 1, 2018, and goes into effect on that date.
“Substantively, there isn’t too much that changes from current ADA/FMLA standards, as pregnant employees have protections under existing federal and state anti-discrimination laws,” says Carly Fallon, Director of Human Resources at CheckWriters.
“However, this act does clarify and expand upon the rights of pregnant employees with respect to the workplace accommodations they must be afforded.”
One of the most consequential developments of 2018 – for both businesses and individuals – was the passage of the Tax Cuts and Jobs Act.
This bill – signed by the president at the end of last year – increases the standard deduction, removes personal exemptions, increases the child tax credit, limits or discontinues certain deductions, and of course, changes the tax rates and brackets themselves.
Now, the IRS has released a new tax withholding calculator to give employees the information needed to complete a new Form W-4, which they can submit to their employer if they choose to adjust their withholding.
The dust has settled around the new tax reform bill that was signed late last year, and one provision included in the law is getting attention from employers as well as human resource professionals.
The Paid Family and Medical Leave Credit is a new federal tax credit for employers who offer paid family or medical leave to their “qualifying employees.” For purposes of the credit, a “qualifying employee” is one who has been employed for at least one year, and did not receive compensation in excess of $72,000 in 2018.
Because employers can only claim the credit if they have a paid family leave policy on the books, HR departments have an opportunity to potentially decrease their organizations’ tax liability by ensuring the policy meets the standards set by the credit – pending review of anticipated IRS guidance.