Over the past several months, dozens of new employment laws and legislative bills were signed into law that went into effect on January 1, 2012. These changes will directly impact the way employers conduct business, including areas such as payroll tax limits, new employment guidelines, and changing insurance markets.

Ari Rosenstein, CPEhr’s Director of Marketing, explains:

“Not only are employers throughout the country burdened by the weak economy, but they are confused and troubled by the seemingly unending flow of employment regulations. Many small employers recognize it is virtually impossible to stay up to date on a regular basis, especially at the turn of a new year when many new laws go into effect. It is for this reason we publish our annual HR Updates report.”

The report draws from CPEhr’s human resources experience on a wide range of employment, payroll, tax and insurance areas. Topics covered in the report include:

• New employment laws effective in 2012
• The IRS Voluntary Worker Reclassification Program
• Understanding the importance of correct employee/1099 classifications
• New 2012 Tax and 401(k) limits
• The value of employee training and development
• Rising Workers’ Compensation costs and how to mitigate them
• Creative approaches to reduce increasing health care premiums

“Our hope is that employers will read the report and, at the least, become aware of the important changes coming in 2012. At best, we hope they will take the time to investigate the new laws and adjust their business activities accordingly,” said Rosenstein.

#5. The Five Steps of Progressive Discipline

#4. 9 Lawsuits that are Changing the 2011 Landscape

#3. Important Changes to I9 Form Documentation

#2. California Labor Law Updates – 2011

#1. Maintaining Employee Personnel Files

Below is a summary of the important changes. Payroll/tax figures which remain the same in 2012 are noted as such.

FEDERAL

FICA (Social Security)

Maximum Taxable Earnings – $110,100

Employer/Employee 2012 Withholding Percent – 6.2%

Employer/Employee 2012 Maximum Withholding -$6,826.20

FICA (Medicare)

Maximum Taxable Earnings – No Limit

Employer/Employee 2012 Withholding Percentage – 1.45%

Employer/Employee 2012 Maximum Withholding – No Limit

SUPPLEMENTAL WAGES

Rate (flat rate withholding method)  – 25%

Over $1 million – 35%  (No change from 2011)

WITHHOLDING

The 2012 withholding tables have not been finalized, as Congress has not yet finalized their decision on whether to adjust the tax rates.  Any changes in the withholding tables will be communicated once they have been announced.

401 K PLAN DEFERRAL LIMITATIONS:

Elective Deferrals – $17,000 ($500 increase from 2011)

401K Catch Up Contribution Deferrals – $5,500 (No change from 2011)

HSA PLAN DEFERRAL LIMITATIONS

Individual Maximum Contribution (Includes Employer Contribution) – $3,100  (up $50 from 2011)

Family Maximum Contribution (Includes Employer Contribution) – $6,250 (up $100 from 2011)

Catch Up Contributions (55+ years old)  – $1,000  (No change from 2011)

CALIFORNIA ONLY:

SUPPLEMENTAL WAGE WITHOLDINGS

Bonuses & Earnings from Stock Options – 10.23%  (No change from 2011)

Other Supplemental Earnings – 6.60%   (No change from 2011)

DISABILITY INSURANCE (Employee Paid)

Maximum 2012 Wages Subject to Withholding -  $95,585   (up $2,269 from 2011)

Employee 2012 Withholding Percentage -  1.0%  (down .2% from 2011)

Employee 2012 Maximum Deduction – $955.85  (down $163.94 in 2011)

1. The rate or rates of pay and basis thereof, whether paid by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime, as applicable;
2. Allowances, if any, claimed as part of the minimum wage, including meal or lodging allowances;
3. The regular payday designated by the employer in accordance with the requirements of this code;
4. The name of the employer, including any “doing business as” names used by the employer;
5. The physical address of the employer’s main office or principal place of business, and a mailing address, if different;
6. The telephone number of the employer;
7. The name, address, and telephone number of the employer’s workers’ compensation insurance carrier;
8. Any other information the Labor Commissioner deems material and necessary

Going forward, if any of the above information changes, the employer must provide the employees notice of these changes within seven days in one of the following methods:

1. By providing a written amendment to the statement;
2. By issuing an entirely new notice;
3. Via paycheck stub, if the updated information is contained on the paycheck stub.

AB 469 does NOT apply to exempt employees, public employers, or employees already covered under a collective bargaining agreement (unionized employees).

While the Labor Commissioner has stated that a template will be made available to assist employers, we strongly encourage you to contact a CPEhr human resources outsourcing specialist to assist you in complying with the new law.

Under the final rule, employers can no longer accept certain documentation for I-9 verification, such as expired documents. The final rule also prohibits employers from accepting Forms I-688, or I-688A and I-688B, “Employment Authorization Cards.” In addition to prohibiting certain types of documentation, the final rule also allows employers to accept new List A documents. For example, the rule allows employers to accept the new U.S. passport card and the temporary Form I-551, “Permanent Resident Card” as List A documentation.

The Changes are Effective Beginning May 16, 2011

The final rule becomes effective and applies to employees hired on and after May 16, 2011. Employers must be proactive to ensure their new employee procedures reflect the Form I-9 documentation changes by May 16, 2011.

The changes to the verification document requirements were designed to establish clear standards for U.S. employers and to address document fraud concerns. Although the final rule necessitates employers to adjust their new employee hire procedures, the changes should make the verification process easier for employers than it is currently.

New Rule = New Employee Intake Procedures

Employers should immediately take steps to ensure compliance with the I-9 requirements to comply with the final rule when it becomes effective on May 16, 2011. Employers should develop guidance for their human resource personnel or any individuals processing new employee documentation, educating them of the I-9 changes. Employers may find it helpful to develop checklists for their personnel describing acceptable and prohibited I-9 documentation under the final rule.

Source: www.Bryancave.com

Let’s take a look at one feature of HR – payroll. Of all employee-related processes, there is no doubt that the laws surrounding payroll processing and payroll tax submission are some of the most difficult to master, even for the tax accounting specialist. Consider the following statistics:

• The tax code (the basic law written by Congress) is 2,840 pages.
• The IRS regulations add an additional 46,000 pages.
• The combined number of forms for businesses and individuals is now over 480

Internal Revenue Code (IRC) 6656 reviews penalties for late payments of payroll deposits. A deposit only ONE day late will result in a penalty equal to 2% of the delinquent amounts. It jumps to 5% for payments made 6 days late, and doubles to 10% for payments made 16 or more days late. A recent report states that over 1 MILLION tax penalty statements are sent out quarterly.

Common Payroll Tax Mistakes

Simple attention to the details can often reduce the risk of missing a tax payment, or making an incorrect deposit.  Below are three common mistakes that Human Resource Outsourcing services can help prevent:

1. Submitting Late Deposits

Once you have withheld taxes from the employee, it is important to know when and how these taxes, along with the employer contributions, must be paid.  There are many regulations at the Federal and State levels that dictate when and how payments are to be remitted.  If payments are late, penalties and interest can be assessed. Contact your accountant, bookkeeper or payroll vendor to find out your payment obligations.

2. Late or Incorrect Payroll Tax Return Filings

There are numerous Federal and State returns that must be filed for payroll taxes, including withholding, unemployment, local and school district taxes.  All have different reporting requirements (paper, e-file, mag media, etc.) and due dates.  If proper procedures are not followed, penalties and interest can be assessed.

3. State Unemployment Insurance Rates not updated

Most States update employer SUI rates annually.  It is important to update the payroll software with the new rates, so taxes are properly paid.  Underpayment of taxes can result in penalties and interest. Once again, contact your CPA for this information.

Avoid the Obligations Altogether – Outsource it

Most small employers recognize they are unable to stay abreast of all their payroll tax obligations. Many already outsource payroll to an outside payroll vendor. However, many employers are now outsourcing this HR function to a Professional Employer Organization (PEO). A PEO “co-employs” the client’s worksite employees and assumes the payroll and tax obligations of the client. The payroll is reported under the PEO’s Federal Tax ID Number, which in turn provides a layer of compliance to the business. IRS audits, payments and inquiries are directed to the PEO, which has teams of payroll and tax specialists on staff. Thousands of employers have found that a PEO is precisely the cure to the payroll tax headaches they have been looking for.

Discover today how outsourcing human resources can help your business keep its payroll running smoothly!

On the employment front, many employers hold no hard feelings letting 2010 go. It was one of the most active legislative years on recent record, and while 2011 has many new regulations in store, in won’t compare to the previous year. However, while many business owners may be suffering from “governmental overload”, there are still some significant changes in store of which they should still be aware.

2011 Human Resources Updates

We are proud to announce the availability of our newly published report, 2011 Human Resources Updates. This important report takes a snapshot-view of many timely issues facing employers in 2011. Topics include:

• New 2011 Employment Laws
• Staying up to date with Health Care Reform
• 2011 Payroll and Tax Updates
• Employee and Management Training
• Recruiting – what lies in store in 2011
• Creating a safe work environment
• Managing in the age of social media.

While most employers would rather look towards new sales revenues and improving financials, it is extremely important to remain aware of legislation that could impact their business in 2011.

Download your free copy of CPEhr’s 2011 Human Resources Update Report today. No registration required!

HIRE Act.

On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act. The Act provides a wide range of incentives for employers including a tax holiday for hiring “new” workers and a tax credit for retaining such workers. The goal of the plan is to stimulate the economy and bring people back to work.

The key highlights of the “Tax Holiday” are:

* Relieves a “covered employer” of its obligation to pay its 6.2% match for Social Security on the first $106,800 of wages (potential savings of $6,622)
* Applies to those workers hired after 2/3/10 but before 1/1/11 on wages paid between 3/19/10 and 12/31/10

Health Care Reform.

Two bills were signed into law on March 23rd and 26th, 2010 – The Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act, respectively. Both laws have important consequences for employers and group health plans.

Effective 01/01/2014 employers with 200 or more full-time employees must automatically enroll new hires in health coverage. Employers with more than 50 full-time employees that do not offer coverage must pay a penalty of $166/month per employee (excluding first 30).

Disability Discrimination.

Recent California case law has changed the playing field, once again, in regards to disability discrimination. The two key updates are:

In the event an employee has been previously granted special accommodations for a disability, the employer has a continuing duty to inform new supervisors of these accommodations. Failure to do so can place the employer at risk of being sued.

Employers are required to actively identify and offer available positions to disabled employees – it is not sufficient to merely “allow” the disabled employee to apply for a new position.

Harassment Claims.

Attorneys have previously advised managers that “being a jerk” on the job, while impolite and unprofessional, does not violate the law, so long as the negative behavior was work related. However, a recent case made its way to the California Supreme Court (Roby v. McKesson) wherein an employee claimed her manager demonstrated particular hostility towards her, despite the fact that the behavior was in the context of job and performance criticism. The Court ruled in favor of the plaintiff, stating the manager’s behavior created a hostile work environment. The clear message to managers: don’t be a jerk to your staff in the office!

If you have any questions about these, or any other HR related topics, do not hesitate to contact a CPEhr Human Resources Representative.

One of the provisions states that every employee will benefit from a one year, 2% reduction in Social Security Taxes.  The rate for 2011 will decrease from 6.2% to 4.2% on the first $106,800 of taxable Social Security income.  This translates to the maximum tax decreasing from $6,621.60 to $4,485.60, a reduction of $2,136.00.  The Employer will continue to pay the rate of 6.2%.

If you have any questions regarding this new tax information, please contact CPEhr’s Director of Tax & Compliance Toby Kruger at 424.230.5602.

The draft Form W-2 includes the codes that employers may use to report the cost of coverage under an employer-sponsored group health plan. The Treasury Department and the IRS have determined that this relief is necessary to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with the new reporting requirement. The IRS will be publishing guidance on the new requirement later this year.

Although reporting the cost of coverage will be optional with respect to 2011, the IRS continues to stress that the amounts reportable are not taxable. Included in the Affordable Care Act passed by Congress in March, the new reporting requirement is intended to be informational only, and to provide employees with greater transparency into overall health care costs.

Source: IRS.gov