As COVID-19 vaccinations continue to rise and a sense of normalcy slowly returns, we can hopefully put tumultuous payroll changes behind us. But before we give you a state-by-state rundown on the more mundane upcoming changes, here’s one federal reminder that beginning July 1, 2021, the Employee Retention Credit is claimed against only the employer share of Medicare tax.
State by State Payroll Tax Changes
Effective July 1, 2021, employers and state agencies are required to use specified guidelines for worker classification in regard to unemployment purposes. For purposes of determining eligibility for unemployment benefits or unemployment tax liability for employees and employers, employers or state agencies must: (1) use the test enumerated by the IRS in Rev Rul 87-41, 1987-1, as amended or replaced from time to time, in making its determination and (2) apply the safe harbor provided in Section 530 of the Revenue Act of 1978 as amended and extended by subsequent acts of Congress.
The minimum wage rate is scheduled to increase in many localities in California on July 1, 2021:
- Alameda The minimum wage rate will remain $15.00 per hour.
- Berkeley The minimum wage increases to $16.32 per hour.
- Emeryville The minimum wage increases to $16.97 per hour.
- Fremont For small employers (25 or fewer employees), the minimum wage rate increases to $15.00 per hour. For large employers (more than 25 employees), the minimum age rate increases to $15.25 per hour.
- Long Beach The minimum wage rate for hotel workers increases to $15.69 per hour. The minimum wage for concessionaire workers increases to $15.32 per hour.
- Los Angeles (city) The minimum wage rate increases to $15.00 per hour. The minimum wage rate for hotel workers (hotels with 150 or more rooms) increases to $17.65 per hour.
- Los Angeles County For small businesses (25 or fewer employees), the minimum wage increases to $15.00 per hour. The minimum wage remains $15.00 per hour for large employers (26 or more employees).
- Malibu The minimum wage for small employers (25 or fewer employees) and large employers (26 or more employees) will be $15.00 per hour.
- Milipitas The minimum wage rate increases to $15.65 per hour.
- Pasadena For all employers, the minimum wage is $15.00 per hour.
- San Francisco The minimum wage increases to $16.32 per hour.
- Santa Monica For small employers (25 or fewer employees), the minimum wage increases to $15.00 per hour. For large employers, the minimum wage remains $15.00 per hour. For hotel workers, the minimum wage increases to $17.64 per hour.
- San Jose Absent any further legislative action, San Jose’s COVID-19 paid sick leave ordinance expires on June 30, 2021.
District of Columbia
The minimum wage rate increases to $15.20 per hour on July 1. The cash minimum wage for tipped workers will increase to $5.05 per hour.
- Chicago On July 1, 2021, the Chicago minimum wage increases to $14.00 per hour for small employers (4 to 20 employees) and to $15.00 per hour for large employers (21 or more employees). The Chicago minimum wage for youth workers will increases to $11.00 per hour. The Chicago minimum wage for tipped workers will increase to $8.40 per hour for small employers, $9.00 per hour for large employers, and $6.60 per hour for youth workers.
- Cook County Also on July 1, the Cook County minimum wage remains $13.00 per hour. The cash minimum wage for tipped workers is $6.60 per hour.
Beginning July 1, employers who employ five or more minor employees at each individual location will be required to register on the state’s new Youth Employment System (YES). As a result, minors seeking employment will no longer be required to request a work permit from their school administrations.
Beginning, July 1, the Montgomery County minimum wage increases to $13.50 for smaller employers (10 or fewer employees); to $14 per hour for mid-sized employers (50 or fewer employees); and to $15 per hour for large employers (51 or more employees).
Unclaimed property holder report for unclaimed wages is due on July 1, 2021. While negative reporting is not required, the Department of Treasury strongly encourages holders to file.
Effective July 1, 2021, the Minneapolis minimum wage increases to $14.25 per hour for large businesses (more than 100 employees). The minimum wage increases to $12.50 per hour for small businesses.
On July 1, the minimum wage increases to $9.00 per hour for employees with health insurance and to $9.75 per hour for employees without.
Beginning July 1, new forms will be used to report withholding tax. Form TRD-41414, Wage Withholding Tax Return, will be used to report withholding from payments to employees. Form TRD-41409, Non-Wage Withholding Tax Return, will be used to report withholding from non-wage payments. Both forms are due the 25th of the following month.
- Bernalillo County On July 1, the maximum accrual for paid leave for any reason increases to 40 hours per year. Accrual begins on the 90th day of employment or the effective date of the ordinance for current employees.
Starting July 1, 2021, the minimum wage for fast food workers increases to $15.00 per hour in areas outside of New York City. New York City remains at $15.00 per hour.
There are two New York City laws that will take effect on July 1, 2021 that will have an impact on fast food employees, specifically in the areas of discharge, scheduling, and hiring. The new laws, Int. No. 1415-A and Int. No. 1396 make changes that expand New York City’s Fair Workweek Law to provide “just cause” protections for fast-food workers. The new laws provides that a fast-food employer can’t terminate an employee (or significantly reduce an employee’s hours) strictly for “just cause.” There must also be a “bona fide economic reason,” which is defined to mean “the full or partial closing of operations or technological or organizational changes to the business in response to the reduction in volume of production, sales, or profit.” Any terminations that meet the qualifications must be carried out in reverse order of seniority, and where employees have been fired or have had their hours restricted, the employer may not hire new employees until it has made reasonable efforts to reinstate or restore hours to any of the affected employees.
The Unclaimed property holder report for unclaimed wages is due on August 1, 2021. While negative reporting is not required, the Department of Treasury strongly encourages holders to file. Negative reporting is not accepted.
The following local income tax rates will increase on July 1: (1) Cridersville increases to 1.5% and (2) Midvale increases to 1.5%.
The minimum wage increases as follows on July 1: (1) Portland Metro Area: $14.00 per hour; (2) standard counties: $12.75 per hour; (3) non-urban counties: $12.00 per hour.
The first quarterly withholding report due for the Greater Portland Supportive Housing Services Tax on July 31, 2021.
The Philadelphia minimum wage rate for city workers and employees of city contractors and subcontractors increases to $14.25 per hour on July 1.
Legislation that provides that a contributing employer’s account will not be charged for UI benefit claims related to COVID-19 is repealed effective July 1, 2021.
Beginning July 1, businesses must use the updated Form TC-69 (Utah State Business and Tax Registration). Form TC-69 is used to register for various tax licenses including the employer withholding license. Schedule TC-69WTH (Employer or Mineral Production Withholding) must be completed and attached to TC-69 for an employer withholding license. Online registration is also available at http://tap.utah.gov.
The state’s overtime law takes effect on July 1. The law requires employers in the state to pay an overtime wage rate of one and a half times the regular rate for all hours worked in excess of 40 hours in a workweek. Small businesses are not exempt. Additionally, Virginia, its agencies, and localities are also subject to the Act.
Beginning July 1, employers must provide up to 40 hours of paid sick leave per year to home health workers who provide personal care, respite, or companion services to an individual who receives consumer-directed services under the state plan for medical assistance services. An employee who is an essential worker that works on average at least 20 hours per week or 90 hours per month is entitled to paid sick leave. Employees must accrue at least one hour of paid sick leave benefit for every 30 hours worked.
Effective July 1, 2021, hospitals with 25 or fewer acute care beds and certified by the Centers for Medicare & Medicaid Services as sole community hospitals must allow hospital employees to take uninterrupted meal and rest periods, with some exceptions. Employers are prohibited from requiring mandatory overtime and may not use prescheduled on-call time to address certain staffing situations. Employees who work more than 12 consecutive hours must be provided the option of at least eight consecutive hours of uninterrupted time off following the time worked.
Effective July 25, 2021, the term “family member” as it relates to the states Paid Family and Medical Leave program will include any individual who regularly resides in the employee’s home or where the relationship creates an expectation that the employee care for the person, and that the individual depends on the employee for care. Family member does not include an individual who simply resides in the same house with no expectation that the employee care for the individual.
Effective July 25, 2021, the Washington Department of Labor and Industries (DLI) is prohibited from issuing new subminimum wage certificates for people with disabilities to employers.
The city service fee for Montgomery increases to $2.00 per week on July 1, 2021.