The Tax Cuts and Jobs Act repealed the exclusion of qualified moving expense reimbursements from gross income and wages effective January 1, 2018.
Qualified moving expenses are defined as any amount received directly or indirectly from an employer as payment (or reimbursement of) expenses which would be deductible as moving expenses under Section 217, if directly paid or incurred by the employee. Previously, qualified moving expenses were excluded from an employee’s gross income for income tax purposes, and were excluded from wages for employment tax purposes.
More information on Section 217 can be found at http://bit.ly/2scqXYH
The U.S. Department of Labor (DOL) has rejected the previous six-part test for determining whether interns and students are employees under the Fair Labor Standards Act (FLSA). Going forward, the DOL will use the “primary beneficiary” test to determine whether interns are employees under the FLSA.
The “primary beneficiary” test examines the “economic reality” of the intern employer relationship to determine which party is the “primary beneficiary” of the relationship.
The following seven factors are part of the test:
- The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee and vice versa.
- The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
- The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
- The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
- The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
- The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
- The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.
The DOL’s Fact Sheet with further information can be found at: https://www.dol.gov/whd/regs/compliance/whdfs71.pdf
Effective January 1, 2018, unless otherwise noted, the following states have made increases to their minimum wage rates:
- Minimum wage will rise to $9.84 per hour.
- Minimum wage will rise to $10.50 per hour.
- Flagg Staff minimum wage will rise to $11.00 per hour.
- Employers with 25 of fewer, minimum wage will rise to $10.50 per hour.
- Employers with 26 of more, minimum wage will rise to $11.00 per hour.
- Cupertino minimum wage will rise to $13.50 per hour.
- El Cerrito minimum wage will rise to $13.60 per hour.
- Los Altos minimum wage will rise to $13.50 per hour.
- Milpitas minimum wage will rise to $12.00 per hour.
- Mountain View minimum wage will rise to $15.00 per hour.
- Palo Alto minimum wage will rise to $13.50 per hour.
- Richmond minimum wage will rise to $13.00 per hour.
- San Jose minimum wage will rise to $13.50 per hour.
- San Mateo (nonprofits) minimum wage will rise to $12.00 per hour.
- Santa Clara minimum wage will rise to $13.00 per hour.
- Sunnyvale minimum wage will rise to $15.00 per hour.
- Minimum wage will rise to $10.20 per hour.
- Minimum wage will rise to $8.25 per hour.
- Minimum wage will rise to $10.10 per hour.
- Minimum wage will rise to $10.00 per hour.
- Minimum wage will rise to $9.25 per hour.
- The minimum wage will rise to $9.65 per hour.
- Minneapolis (101 or more employees) minimum wage will rise to $10.00 per hour.
- Minimum wage will rise to $8.30 per hour.
- Minimum wage will rise to $8.60 per hour.
- Albuquerque minimum wage will rise to $8.95 per hour, $7.95 if employer provides healthcare and/or childcare benefits and employer pays and amount for those benefits equal to or in excess of $2,500 annually.
- Bernalillo County (within the unincorporated area of Bernalillo County, outside of the city limits) minimum wage will rise to $8.85 per hour. If employer provides healthcare and/or childcare benefits and employer pays an amount for those benefits equal to or in excess of $2,500 annually, the minimum wage for that employee is an hourly rate of $00 less than the current minimum wage.
- Minimum wage will rise to $8.30 for non-tipped employees and $4.15 for tipped employees per hour for businesses with annual gross receipts of more than $305,000 per year. Smaller companies with annual gross receipts of $305,000 or less per year, and for 14- and 15-year-olds, the minimum wage is $7.25 per hour.
- Minimum wage will rise to $10.10 per hour.
- Minimum wage will rise to $8.85 per hour.
- Minimum wage will rise to $10.50 per hour.
- Minimum wage will rise to $11.50 per hour.
- Seattle (more than 500 employees in the US with medical benefits) minimum wage will rise to $15.00 per hour.
- Seattle (500 or less employees in the US) minimum wage will rise to $11.50 per hour.
- Seattle (500 or less employees in the US with minimum compensation) minimum wage will rise to $14.00 per hour.
- Tacoma minimum wage will rise to $12.00 per hour.
The Internal Revenue Service has announced cost of living updates for tax year 2018.
Highlights of the notices include:
- The elective deferral or contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan will increase to $18,500.
- The §415 limitation for defined contribution plans will increase to $55,000 for 2018.
- The maximum compensation limit will increase to $275,000.
- The dollar limitation concerning the definition of a key employee in a top-heavy plan will remain at $175,000.
- The dollar limitation used in the definition of a highly compensated employee will remain at $120,000.
- The catch-up contribution limit for those persons age 50 and over will remain at $6,000.
For additional information please go to: http://bit.ly/2gIHWt6
On July 25, 2017 the U.S. Department of Labor announced an increase to the prevailing health and welfare fringe benefit rate under the McNamara-O’Hara Service Contract Act (SCA). The rate increased to $4.41 per hour.
For existing contracts, government contractors should check routinely to verify if new wage determinations (WD) have been published by contracting agencies (or, in the case of subcontractors, by their prime contractor) by incorporation into their contracts. Generally, the new rate will go into effect on the anniversary date (annually, or every two years for non-appropriated funds contracts) or option renewal/modification date of these contracts — whichever date for a particular contract triggers incorporation of a new WD by the contracting agency.
In addition, C2 Clients should advise C2 of any changes to their SCA contracts or award of new SCA Contracts. For clients who reconcile health and welfare dollars on a monthly basis, it is important to note if the WD number ends in an odd or an even number. This number will determine if reconciliations are completed on a one-for-one basis (odd numbers) or on an average basis (even numbers).
Further information is available at: http://bit.ly/2zjw0cI
Rhode Island has passed a paid sick leave law, effective July 1, 2018. Note that the provisions outlined below serve as minimum requirements – employers are permitted to go above what is prescribed by the law. Employers who already have a paid leave program that meets or exceeds the law’s requirements need not offer additional leave.
Employees (of employers with 18 or more employees in Rhode Island) generally will accrue at least one hour of paid sick and safe leave time (“paid sick leave”) for every 35 hours worked, up to a maximum of 24 hours during calendar year 2018; 32 hours during calendar year 2019; and 40 hours per year beginning in 2020 (unless the employer chooses to provide a higher annual limit in both accrual and use).
Paid sick leave begins to accrue at the commencement of employment or July 1, 2018, whichever is later. An employer may provide all paid sick leave that an employee is expected to accrue in a year at the beginning of the year.
Carryover and Payment
Paid sick leave is generally carried over to the following calendar year. However, an employee’s use of paid sick leave in each calendar year may not exceed 24 hours during calendar year 2018; 32 hours during calendar year 2019; and 40 hours per year beginning in 2020.
Alternatively, an employer may pay an employee for unused earned paid sick leave at the end of a year and provide the employee with an amount of paid sick leave that meets or exceeds the law’s requirements that is available for immediate use at the beginning of the subsequent year.
However, the law does not require financial or other reimbursement upon the employee’s termination, resignation, retirement, or other separation from employment for accrued paid sick leave that has not been used.