Posted 3 weeks ago - by Payroll Systems

7 Things That Affected Employment Regulations & Compliance in 2020

2020 was a whirlwind of a year that has impacted just about every industry in one way or another. This year brought on many changes including unprecedented changes to employment laws and compliance.

1. Families First Coronavirus Response Act (FFCRA)

The FFCRA was originally introduced in March as a direct response to the global pandemic triggered by COVID-19. It expanded federal family & medical leave and implemented a new federal paid sick leave law including the following:

• 80 hours of emergency sick leave for full-time employees or a prorated amount for part-time employees.
• 12 weeks of emergency family leave.
• An employee can take the leave under the FFCRA as long as their work is available to them.

Employers are subject to pay for this sick leave, but the IRS will refund the amounts paid through a credit against payroll taxes. The FFCRA also sparked the initiation of several local ordinances regarding their own paid sick leave. This came with several notices that employers are required to post in a visible location or distribute to remote employees electronically. 

2. Coronavirus Aid, Relief, and Economic Security Act (CARES) 

The CARES Act was also introduced in March and offers various economic relief options during the current pandemic.

• Provided small businesses loans (Payroll Protection Program)  to pay up to 8 weeks of payroll costs, benefits and under some circumstances, interest on mortgages, rent, and utilities.
• Eligible employers could receive a refundable tax credit against certain employment taxes.
• Many over the counter medicines were made eligible for pre-tax benefit plans (FSA, HSA, and HRA) without the need for a prescription.

3. Tax Withholding Deferral 

An executive order was signed on August 8th that allowed for the deferring the withholding of the employee portion of Social Security Tax. The IRS clarified the following:

• Applies to employees whose wages are less than $4k for a bi-weekly pay period.
• It will only be in place from September 1st, 2020- December 31st, 2020
• Employers are responsible for collecting the deferred taxes and repaying them back in the first four months of 2021.

However, there are still some things that were left unclear such as possible penalties if taxes are not paid back and what would happen if an employee leaves the company before the employer can collect the amount due in early 2021.

4. 1095-B & 1095-C Deadline Extension

In October of 2020, the IRS announced that they would extend the deadline for those two forms from Jan 31, 2020, to March 2, 2021.

5. I-9 Verification Deadline Extended

Any organization that is operating in remote-only capacities during the current pandemic has been granted an extension through December 31, 2020, to verify any I-9 forms.

6. Overtime Exemption Limit Increased

The Department of Labor (DOL) enacted an increase on the wage threshold for employees that are eligible for overtime from $455 per week to $684 per week ($35,568 annually). This went into effect on January 1, 2020. Anyone meeting or under this new threshold is eligible for overtime per the Fair Labor Standards Act.

7. Social Security Wage Base Increased 

The Social Security Administration (SSA) announced in October that the social security wage base would be increased to $142,800 in 2021.

The Federal Insurance Contribution (FICA) tax rate, which is the combined social security tax rate of 6.2% and the Medicare tax rate of 1.45%, will be 7.65% for 2021 up to the social security wage base. The maximum social security tax employees and employers will each pay in 2021 is $8,853.60- an increase of $316.20 from $8,537.40 in 2020.

Need expert help keeping up with rapidly changing compliance and regulations?

Contact Payroll Systems to see how you can leverage our easily scalable solutions—from paperless new employee onboarding, paperless benefit enrollment, timekeeping systems with companion mobile app, physical clocks, and customized job costing and labor distribution reporting.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.