The California state legislature recently passed a bill to raise the state's minimum wage. Beginning July 1, 2014, California's minimum wage will be $9.00 per hour. On January 1, 2016, the minimum wage will again be increased to $10.00 per hour. More information on California minimum wage changes can be found here.
Starting October 1st, 2013, employers must notify all of their employees (whether they participate in health care or not) of the option to purchase health coverage through the Federal Health Insurance Marketplace. Abacus Payroll Services has placed the Department of Labor's model notices here:
We advise our clients to print out the model that applies to them, fill in the employer portion, and give a copy to each of their employees. If you have any questions, please contact your customer service representative.
WHO MUST COMPLY:
According to the Department of Labor, employers to which the Fair Labor Standards Act (FLSA) applies must comply with the new mandate. In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. For most firms, a test of $500,000 or more in annual dollar volume of business applies. More information can be found here. To determine whether the FLSA applies to your business, you can use this tool provided by the Department of Labor.
Please remember that all current employees must be given a copy of the notice by October 1st, 2013. Going forward, all new employees must be given a copy of the notice upon hire. Starting in 2014, the Department of Labor has mandated that new hires must be given a copy of the notice within 2 weeks of their start date.
The Department of Treasury announced yesterday that based on concerns of employers it will delay certain provisions in the Affordable Care Act. Included in the provisions that will be delayed are the employer reporting requirements and the tax penalties for businesses subject to the Play or Pay requirements. Essentially this delays the requirement for certain employers to offer healthcare to their employees until 2015.
The IRS has just released the 2013 version of the IRS Publication 15, Circular E, Employer's Tax Guide.
Social Security tax rate: The year the employee Social Security tax rate has increased from 4.2% to 6.2%. The maximum wage limit is $113,700.
Medicare tax withholding: Employers must withhold an additional 0.9% Medicare tax from wages paid to an employee in excess of $200,000. This additional Medicare tax is imposed only on the employee.
The American Recovery and Reinvestment Act of 2009 included a Making Work Pay credit, which employees received in the form of reduced withholdings on their paychecks. This credit was only in effect through the end of 2010. However, in 2011 a provision in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act reduces the employee Social Security withholding tax rate from 6.2% to 4.2%, effective January 1, 2011 through December 31, 2011. This provision, like the Making Work Pay credit, is intended to increase employees' take-home pay.
As a result of these two changes, most employees will see less total tax withheld from their paychecks. In some cases, however, employees will see more total tax withheld. This is because, for employees with modest incomes, the 2% reduction in the Social Security withholding rate only partially offsets the elimination of the Making Work Pay credit.