Regulatory Challenges Abound, but Tech Won’t Address Them All

Employers shouldn’t expect regulatory pressure to ease up any time soon, according to compliance professionals at Paychex. The company believes that employers next year will face changes at all levels of government on issues ranging from worker classification to privacy and, of course, nuts-and-bolts tasks such as W-4 and overtime rule changes.

Some of these issues are sure to involve either new technology solutions or, more likely, revisions to existing tools.

These include:

• Implementation of new Form W-4: Key changes include elimination of withholding allowances and the ability for taxpayers to have more funds withheld. Employees hired as of January 1, 2020, must complete the new form while existing employees can choose whether or not to adjust withholding based on its requirements. Employers must be prepared to compute withholdings based on both the old and new versions of the form, Paychex said.
  
• Final Overtime Rule: Effective as of January 1, the rule raises the “standard salary” for the executive, administrative and professional white collar exemptions from $455 to $684 per week. It also allows employers to use non-discretionary bonuses and some incentive payments to satisfy up to 10 percent of the standard salary level in a 52-week period.
  
• Worker Classification: Perhaps the most impactful example of such legislation is California AB5, Paychex said, which will require employers to prove that a worker satisfies a three-part test to be classified as an independent contractor. Other state and local legislatures are considering similar legislation.
  
• Flexible Pay: The expansion of options to more quickly send and receive funds will continue. New developments include the rollout of the Clearinghouse’s Real Time Payments network, the expansion of same-day ACH for businesses and pay-on-demand products that allow workers to receive funds as they are earned.  
  
• Privacy Related Regulations: Paychex is paying special attention to the California Consumer Privacy Act. Even though employers have been exempted from many requirements until 2021, the notice provision will still apply. That means any business meeting the law’s criteria must provide employees with a privacy policy notice. Complicating matters: This is something of a moving target, since the requirements will continue evolving until final guidance is issued sometime next year. 
  
• Healthcare Reform: The administration in Washington has shifted a number of healthcare regulations and more changes are on the way. In response to federal moves, some states have taken legal action to shape their own healthcare landscape. This leaves employers facing a number of complex choices, and organizations must remember that the situation is fluid—especially with federal and state elections looming next November.
  
• Expanded IRS Enforcement: The IRS continues to expand and refine its enforcement of the Employer Shared Responsibility provisions. While good-faith-effort relief for inaccurate or incomplete filings has been extended, that relief doesn’t apply to returns that weren’t filed in a timely manner. Large employers should ensure they do their due diligence and promptly report information on Forms 1094-C/1095-C, and quickly respond to any IRS notices they receive.

HCM technology will play a role in addressing other issues, but HR and legal professionals themselves will, at least for a time, take the lead in addressing these issues:

• Sexual Harassment Prevention: A number of state and municipal governments have passed legislation or developed regulations expanding requirements for workplace sexual harassment prevention policies and/or training. So, employers should examine their internal processes for addressing inappropriate workplace behavior. Technology’s not the answer to this one. HR was to pay attention.
  
• Paid Leave: A number of state and local jurisdictions have implemented regulations impacting paid sick leave or paid family and medical leave programs. There’s also bipartisan interest in a paid family leave law at the federal level. Eventually HR systems will assist with administering these strictures, but employers must still keep track of governmental debates and actions.
  
• Marijuana’s Changing Status: State and local jurisdictions continue to decriminalize marijuana. Employers should keep track of legal developments, Paychex said, and consider adjusting their risk mitigation strategies, including workplace policies to allow for the lawful use of medical marijuana.

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