Payroll developments to observe in 2022 (Half 1)


Payroll developments to observe in 2022 (Half 1)

Half 1 of this blogpost explains how prevalent payroll is in our each day lives with a deal with key points in 2022, together with employee classification, COVID-19 vaccine mandates, and wage and hour. Learn half 2 for extra 2022 payroll developments.

On a current weekend getaway from Hoboken, New Jersey to Miami, Florida, I noticed simply how ubiquitous the topic of payroll is in our lives on a day-to-day foundation. It was a frigid Saturday morning in mid-January. I used to be pinching the collar of my topcoat closed whereas ready on the road nook for my app-based driver. When the motive force pulled up, I threw my carry-on bag within the trunk and hopped within the again seat.

Employee classification

Now, in New Jersey, state legislation dictates the ABC take a look at for use to find out employee classification. This implies a employee is mainly thought-about an worker by default except three particular standards are met. Again in 2019, New Jersey hit app-based driving firm Uber up with a $640 million tax invoice alleging misclassification of its employees as unbiased contractors.

California additionally makes use of the ABC take a look at for employee classification functions.  Nonetheless, a voter-approved November 2020 poll (Proposition 22) merchandise exempted app-based driving corporations like Uber from the rule.  However then the state challenged the poll merchandise in court docket, and in August 2021, it was dominated unconstitutional. The ruling is presently being appealed, so it might change once more.

Employee classification is an enormous subject for companies.  It may end up in expensive penalties and the fee of again wages and taxes. Even when an employer makes use of a third-party useful resource for payroll functions, the onus sometimes stays on the enterprise to verify payroll issues adjust to all of the legal guidelines, guidelines, and laws on the federal, state, and native ranges.

The IRS has some info on its web site for employers relating to employee classification. Kind SS-8, Willpower of Employee Standing for Functions of Federal Employment Taxes and Earnings Tax Withholding, will also be used to request a employee classification willpower. Typically, the IRS takes the strategy beneath the frequent legislation guidelines {that a} employee is an worker if the enterprise has the appropriate to regulate what might be executed and the way it’s executed. Kind SS-8 requests are solely made to resolve federal tax issues.

The U.S. Division of Labor (DOL) additionally has steerage on its web site relating to employee classification. The steerage usually says that employees are unbiased contractors in the event that they run their very own enterprise, are paid upon completion of the undertaking, present their very own instruments, work with a number of purchasers, resolve when and the way they may carry out the work, and resolve what work they may do. Employees who’re workers are protected beneath the Truthful Labor Requirements Act (FLSA) for issues like minimal wage, extra time, hours labored, recordkeeping, and youngster labor.

States may have guidelines for deciding employee classification. As already talked about, New Jersey and California use the ABC take a look at, which solely considers employees to be unbiased contractors if they’re: (A) free from path and management, (B) usually engaged in an unbiased commerce or enterprise, and (C) preforming work outdoors the standard course of the hiring entity’s enterprise.

It is vital for companies to know the legal guidelines, guidelines, and laws for employee classification to keep away from lawsuits, fines, and penalties. There could also be extra adjustments in 2022. The Nationwide Labor Evaluate Board is presently inviting briefs relating to its unbiased contractor customary. The due date for these submissions is February 10, 2022.

The Payroll Information on Checkpoint Edge gives detailed steerage on employee classification that features a fast reference chart and create-a-chart instrument explaining the foundations for classification in every state.

COVID-19 vaccine necessities for employers

After I acquired to Newark Liberty Airport, I made my approach via the Transportation Safety Administration (TSA) checks and solely eliminated my masks for a number of moments when prompted by safety for identification verification functions. I’m absolutely vaccinated for the coronavirus (COIVD-19). However that vaccination might have been a requirement by the federal authorities if the Biden administration’s vaccine and testing rule for employers with 100 or extra workers had been upheld by the U.S. Supreme Courtroom.  Nonetheless, SCOTUS dominated in opposition to that mandate on January 13, 2022. The Occupational Security and Well being Administration (OSHA) withdrew this rule on January 26, 2022. That mentioned, employers can nonetheless require workers to be vaccinated or examined for the virus, amongst different COVID-19 prevention and security measures that embody carrying masks.

For TSA workers, who’re thought-about federal workers, there’s one other COVID-19 vaccination requirement from the Biden administration. This order can be going through lawsuits.  On January 21, 2022, a federal court docket decide in Texas blocked the enforcement of that requirement (Feds for Medical Freedom et al v. Biden, S.D. Tex., No. 3:21-cv-00356, 01/21/22). That ruling is being appealed.

To make issues extra complicated for employers, sure states have necessities in relation to the COVID-19 vaccine and/or testing. Different states have guidelines that forbid such actions.  Fines and penalties might outcome if employers don’t sustain with the adjustments. Employers can moreover have COVID-19 vaccine necessities as a situation of employment. This consists of a number of airline corporations.

A colleague of mine just lately posted a Thomson Reuters tax weblog on the subject of COVID-19 vaccine mandates in all 50 states – extra particularly, the vaccine mandates (if any), employee refusal for the vaccine, and unemployment advantages. See Employer Vaccine Mandates, Employee Refusals, and Unemployment Advantages (01/24/22) for extra info.

Though OSHA has formally withdrawn its rule for COVID-19 vaccines or testing for employers with 100 or extra workers, it has a webpage that gives steerage for employers that will wish to implement some type of vaccine and testing requirement for his or her employees. OSHA mentioned that whereas it has withdrawn its rule as an Emergency Non permanent Commonplace (ETS), it isn’t withdrawing the ETS as a proposed rule. OSHA added that it’s prioritizing its assets to deal with finalizing a everlasting COVID-19 Healthcare Commonplace.  Extra on this must be anticipated throughout 2022.

The Payroll Information for Checkpoint Edge has a wealth of COVID-19 info that features vaccination necessities on the federal and state ranges. Our COVID-19 for Pay part has in-depth details about federal and state legislation adjustments as a result of pandemic. There are additionally create-a-charts particular to points from the well being emergency.

Wage and hour

After touchdown at Miami Worldwide Airport, I organized for an app-based driver to take me to my resort in Miami Seaside. In Florida, based on the state’s Division of Financial Alternative (DEO), app-based drivers are thought-about unbiased contractors and usually are not entitled to unemployment advantages. So, my Uber driver in New Jersey could also be thought-about an worker whereas my driver for a similar firm in Florida is taken into account an unbiased contractor. Multi-state employers positively need to pay attention to these variations.

After being dropped off, I entered the foyer of the resort I used to be staying at and was greeted by a really hospitable worker who directed me to the entrance desk. Many resort employees are hourly workers, and there are a selection of wage and hour and wage fee guidelines for employees within the service trade. There are each federal guidelines and state guidelines. There are even native guidelines – California, for instance, has greater than 40 localities with particular minimal wage adjustments that happen at differing instances.

Florida’s present minimal wage is $10 per hour, with a money wage for tipped workers of $6.98 per hour. The minimal wage price for Florida workers will enhance steadily to $15 per hour by 2026.

The DOL web site notes that the federal minimal wage continues to be $7.25 per hour on the nationwide stage.  Federal minimal wage provisions are contained within the FLSA. The DOL web site additionally features a map of minimal wage charges by U.S. state. Most states have some type of minimal wage legal guidelines with many minimal wage charges above the federal stage.

In 2021, the Biden administration ordered federal employees to be paid a minimal wage of $15 per hour. On January 30, 2022, these minimal wage directives took impact. So now, all federal employees and people engaged on federal contracts have to be paid no less than $15 per hour. The Biden administration’s launch on this explains that almost 70,000 federal employees will earn $15 per hour and 300,000 workers of federal contractors will begin to see the rise this yr. The DOL’s weblog additionally famous the rise.

In 2022, plenty of minimal wage price will increase will take impact for a lot of totally different states and localities. Some state legal guidelines enhance the wage price after which depend on the Shopper Value Index (CPI) for annual changes. Some states have staggered will increase for small and enormous employers.

This yr in Hawaii, lawmakers have proposed an $18 minimal wage price enhance for all workers within the state by 2026. The present minimal wage price is $10.10 per hour. Hawaii Senate Invoice 2018 handed within the Senate late in January 2022 and has been launched within the Home.

As well as, hourly employees are entitled to extra time pay. There are federal and state guidelines that employers should adhere to for this sort of pay as effectively.  The extra time calculation can get a bit of tough when contemplating tipped workers as an employer should take into accounts the tip credit score.

The Payroll Information for Checkpoint Edge has info on wage and hour matters on the federal, state, and native ranges that embody minimal wage and extra time.


If you happen to’re concerned with studying extra about payroll, discover the appropriate reply rapidly with skilled, trusted steerage at your fingertips. Begin your customized trial of Checkpoint Edge in the present day.


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