Last Week in Payroll: Choose to Challenge

The word “challenge” has been used all too frequently since the COVID-19 pandemic began early last year – and with good reason. Back on February 22, 2021, the United States reached a grim milestone of 500,000 deaths due to COVID-19. The somber event was memorialized by President Joe Biden at the White House who noted on February 11, 2021 that getting the United States vaccinated will be one of the “most difficult operational challenges.”

Choose to Challenge

But challenges – big and small – are part of life. According to legendary screen actress Bette Davis, “The key to life is accepting challenges.” And how we choose to handle or deal with challenges is also part of life. Independent filmmaker and soul R&B singer, Gina Carey, believes that, “A strong woman looks a challenge dead in the eye and gives it a wink.”

International Women’s Day is March 8 and the 2021 theme is “Choose to Challenge,” noting that a challenged world is an alert world and that from challenge comes change.  Women have faced many challenges over the years and many have met such challenges head-on.

For example, Frances Perkins was the first woman to serve in the U.S. Cabinet as the Secretary of Labor from 1933 to 1945 – the longest a person has served in that position. This also made her the first woman to enter the presidential line of succession. Perkins began her tenure as Secretary of Labor during one of the most challenging times in American history – the Great Depression.

Perkins established unemployment benefits and pensions for many uncovered elderly Americans with the Social Security Act. Through the Fair Labor Standards Act (FLSA), she established the first minimum wage and overtime laws for American workers and defined the standard 40-hour workweek.

In 1933, Perkins appeared on the cover of Time magazine.  In 1980, long after Perkins’ time as Secretary of Labor ended, President Jimmy Carter renamed the headquarters of the U.S. Department of Labor in Washington D.C. the Frances Perkins Building.  She was also honored with a postage stamp that year.

Perkins chose to challenge and made changes in many ways for women but also for the payroll professional. Minimum wage and overtime laws, unemployment and Social Security are but some of her contributions that almost every payroll professional is familiar with. I found reading about Perkins to be informative and inspirational.  Also, it puts into perspective what the changes Perkins implemented, with the FLSA for example, still mean to us as American workers today.

Now, let’s take a look at this past week in payroll and go over a few of the more interesting stories buzzing about in the industry.

Federal News

Senate passes $1.9 trillion COVID-19 relief bill.  On March 6, 2021, the Senate passed its version of President Biden’s American Rescue Plan Act with a 50 to 49 vote. Among the changes between the House and Senate versions of the legislation include dropping the $15 minimum wage proposal and changing the supplemental federal unemployment benefit payment to $300 per week (was $400 per week under the House bill) through September 6, 2021 (was August 29, 2021 under the House bill). The Senate version continues to include the extension of the paid sick and family leave and employee retention tax credit extensions. Under the Senate version, the employee retention credit would be expanded to certain startup businesses, applying to businesses that began operations after February 15, 2020, have less than $1 million in annualized gross receipts and wouldn’t otherwise satisfy the employer eligibility tests. The paid family and sick leave would continue through September 30, 2021. The House is planning final approval of the bill on March 9, 2021.  From there, the legislation would be sent to President Biden.

IRS guidance on claiming the employee retention credit. The IRS has issued guidance for employers claiming the employer retention credit under the CARES Act, as modified by the Consolidated Appropriations Act, 2021 (CAA). IRS Notice 2021-20 includes clarifications of the CAA’s rules for eligibility for the credit by Paycheck Protection Program borrowers.

USCIS reaches H-2B visa cap. The U.S. Citizenship and Immigration Services (USCIS) announced that it has reached the Congressionally-mandated cap on H-2B visas for temporary non-agricultural workers for the second half of the 2021 fiscal year. The final receipt date for new cap-subject H-2B visa worker petitions requesting an employment start date before October 1, 2021 was February 12, 2021. The USCIS will reject any new cap-subject H-2B visas received after February 17, 2021 that request a start date before October 1, 2021.

IRS forms and publications. The IRS released revised instructions for the 2021 Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding) on February 23, 2021. a withholding agent must file an information return on Form 1042-S to report amounts paid to foreign persons that are reportable under Chapter 3 and Chapter 4 of Subtitle A of the Internal Revenue Code (IRC). The revised version of the instructions increases the amount of penalties, including those for failure to file and failure to properly deliver the form to recipients.

The IRS has issued a draft of the instructions for Form 8850 (Prescreening Notice and Certification Request for the Work Opportunity Credit). The instructions are for use with the March 2016 revision of Form 8850, which is used by employers to prescreen and make a written request to the state workforce agency (SWA) of their state to certify that an individual is a member of the targeted group for purposes of qualifying for the work opportunity credit. The updated instructions add information related to the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the Act), noting that the Work Opportunity Credit has been extended to cover certain employees who work for an employer after 2020 and before 2026.

Finalized effective date of independent contractor rule. The U.S. Department of Labor has issued a final rule that delays the implementation of its final rules on independent contractor status under the Fair Standards Labor Act (FLSA) until May 7, 2021. Originally, the final rule was set to take effect on March 8, 2021. The delay was under the direction of President Biden’s memorandum on January 20, 2021 that ordered a regulatory freeze. The independent contractor final rule published in the Federal Register on January 7, 2021 reaffirmed the “economic reality” test with two core factors and three other factors

State and Local News

Unemployment tax rate rollback. Hawaii Governor Ige signed legislation into law that will roll back the amount of unemployment tax employers in the state will pay in 2021.  Unemployment tax rates were to be determined under greater Schedule H in 2021 (rates range from 2.4% to 6.6%).  The legislation instead requires rates to be determined under lesser Schedule D  (rates range from 0.2% to 5.8%) in 2021 and 2022.

Telecommuting/nexus legislation. Connecticut Governor Lamont issued a statement praising the Connecticut House of Representatives’ fast-tracking of House Bill 6516, which extends a credit for the taxes paid to other states due to workers telecommuting during the COVID-19 pandemic for the taxable year commencing January 1, 2020. The bill would prohibit the Connecticut Department of Revenue Services (DRS) from considering the activities of any employees who worked remotely from Connecticut during the 2020 tax year solely due to COVID-19 in determining whether an employer has nexus with Connecticut for any state tax.

Tax relief for storm victims. The Alabama Department of Revenue (DOR) has announced that it will grant filing extensions to Alabama taxpayers residing or having a business in federally declared disaster areas where damage was caused by recent winter storms. Alabama taxpayers residing in areas designated as disaster areas by the federal government have until June 15, 2021, to file tax returns due on or after February 11, 2021, and before June 15, 2021. Penalty relief will be provided during the extension period. Affected taxpayers filing for tax types that include withholding tax may submit a penalty waiver request using Form PWR. Withholding taxpayers may contact the following DOR offices by telephone for any additional filing guidance at: (334) 242-1300. The tax relief measures mirror IRS measures in the same declared disaster areas.

Employee meal break case reversed/remanded. The Supreme Court of California has recently made a ruling deciding two questions of law for meal periods for employees and reversed the judgment of the court of appeals. A nurse recruiter who worked at a healthcare services and staffing company that recruits nurses for temporary assignments filed a class-action lawsuit against his former employer alleging various wage and hour violations, including a meal period claim at issue on this appeal. The Supreme Court’s decision on the two meal period questions were as follows: (1) employers cannot engage in the practice of rounding time punches (adjusting the hours that an employee has actually worked to the nearest preset time increment) in the meal period context because the meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective and (2) that time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage [Kenney Donohue v. AMN Services, LLC, Cal. Sup. Ct., No. S253677, 02/25/21].

Unemployment taxable wage base updated. Since legislation aimed at freezing the unemployment taxable wage base did not pass before the end of the Michigan 2020 legislative session, the state’s unemployment taxable wage base increases to $9,500 in 2021, unless new legislation is introduced during the 2021 legislative session that would reduce the wage base.

Minimum wage rate for assistance under jobs program set. Virginia legislation, effective July 1, 2021, adjusts the minimum entry-level wage rate per hour a company is required to pay in order to be eligible for assistance under the Virginia Jobs Investment Program (VJIP) from at least 1.35 times the federal minimum wage to at least 1.2 times the federal minimum wage or the Virginia minimum wage, whichever is higher.

Unemployment tax payments for 2021 delayed. The Texas Workforce Commission has announced, that due to the postponement of setting 2021 unemployment tax rates), it will postpone unemployment tax payments for all quarters in 2021. Quarter 1 of 2021 due April 30, 2021 will now be due August 2, 2021. Quarter 2 of 2021 due August 2, 2021 will now be due September 30, 2021. Quarter 3 of 2021 due September 30,2021 will now be due November 1, 2021. Quarter 4 of 2021 due December 31, 2021 will now be due January 31, 2022.