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2020 Form W-4 Finalized

On December 5th, 2019, the IRS released its final version of the 2020 Form W-4. The form is very different from prior years and includes some important changes that could impact both employers and workers. The new form can be found at: https://www.irs.gov/pub/irs-pdf/fw4.pdf

Current employees are not required to complete a new Form W-4, however anyone hired on or after 1/1/2020 will only be offered this new form.

InTANDEM HR is unable to offer tax advice. Employees and employers are encouraged to speak with a qualified tax person to seek assistance with the completion of the new Form W-4.

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New Colorado and City of Denver Minimum Wage

On Wednesday November 27, 2019, Denver Mayor Michael Hancock signed an ordinance that requires all private-sector minimum wage employees working in the city of Denver to receive higher incremental minimum wages.

Effective January 1, 2020, minimum wage will increase from the current $11.10 per hour to $12.85 in Denver. It then incrementally increases as follows:

  • $14.77 an hour on Jan. 1, 2021
  • $15.87 an hour on Jan. 1, 2022
  • Annual adjustments based on the Consumer Price Index each year thereafter.
  • State law requires tipped employees like servers and bartenders can only be paid $3.02 an hour less than the minimum wage. If their tips don’t take them up to the actual minimum wage the employer must pay them in “tip credit make-up”.
  • NOTE – the Colorado minimum wage is increasing to $12.00 per hour effective January 1, 2020

As the state law stands, according to a provision in Colorado’s Fair Labor Standards Act (Section 14(c)), employers are permitted to pay people with disabilities less than the minimum wage if their disability impairs their earning or productive capacity. 

The amendment makes clear that, unlike the current state law, Denver’s law will require everyone, regardless of ability, to receive at least the minimum wage. Minors enrolled in specific employment programs are the only exception.

In addition to the increase, anyone will be able to submit a minimum wage complaint under the new citywide law starting January 1st, 2020. Complaints can be anonymous. At the start of the year, complaints can be sent to Denver Labor via email at wagecomplaints@denvergov.org

Any current employees working in the city of Denver who are being paid less than the minimum wage will be automatically increased to $12.85 effective January 1, 2020. Any current employees working in Colorado outside of Denver will be bumped up to $12.00 if they are currently earning less than that. Exceptions will be made as per above for tipped employees. Contact your Payroll Specialist or Account Manager with questions.

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NEW 2020 W4 Form – Major changes!

The 2020 Form W-4, Employee’s Withholding Certificate, is very different from previous versions. This is due to the federal tax law changes that took place in 2018. The Internal Revenue Service (IRS) is not requiring all employees to complete the revised form and has designed the withholding tables so that they will work with both the new and prior year forms. However, certain employees will be required to use the new form: those hired in 2020 and anyone who makes withholding changes during 2020.

Even though the IRS does not require all employees to complete the revised form and even if your tax situation has not changed, we recommend you perform a “paycheck checkup” to see if you need to make adjustments to your current withholding. To conduct the checkup, you can use the IRS’s Tax Withholding Estimator (www.irs.gov/W4App). To effectively use the estimator, it is helpful to have a copy of your most recent pay stub and tax return. It is likely that the estimator will be updated to account for the 2020 tax tables in early January. A DRAFT of the new form can be found at: https://www.irs.gov/pub/irs-dft/fw4–dft.pdf Please note: if you do not submit a new form, withholding will continue based on your previously submitted form.

Before completing the 2020 Form W-4, please read the instructions that are included with the form. You must complete Steps 1 and 5. Steps 2, 3, and 4 are optional, but completing them will help ensure that your federal income tax withholding will more accurately match your tax liability. Step 1 is for your personal information; Step 2 is for households with multiple jobs; Step 3 is used to claim tax credits for dependents; Step 4 is for other adjustments (additional income such as interest and dividends, itemized deductions that exceed the standard deduction, and extra tax you want withheld); and Step 5 is where you sign the form.

The IRS takes your privacy seriously and suggests that, if you are worried about reporting income from multiple jobs in Step 2 or other income in Step 4(a), you check the box in Step 2(c) or enter an additional withholding amount in Step 4(c). To determine the additional withholding amount, you can use the withholding estimator.

The IRS has also published Frequently Asked Questions that you may find helpful as you complete the form (https://www.irs.gov/newsroom/faqs-on-the-draft-2020-form-w-4).

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New Salary Minimum for Exempt Employees

According to the US Department of Labor, a final rule to the minimum earnings threshold necessary to exempt certain employees was announced September 24, 2019. The final rule is effective on January 1, 2020 and is purported to make another approximately 1.3 million American workers now eligible for overtime pay.

The new earnings threshold has been discussed, blocked, and changed since the 2016 announcement that the current salary minimum, established 15 years ago, would increase. The final rule updates the earnings thresholds necessary to exempt executive, administrative and professional employees from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses/commissions towards meeting the salary level.

The ruling is:

  • raising the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker);
  • raising the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;
  • allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level.

Discretionary bonuses cannot be used toward meeting the salary threshold. The Department of Labor will allow employers to make catch-up payments to employees who do not earn enough in nondiscretionary bonuses or incentive payments in a given 52-week period to retain exempt status, provided that the catch-up payment is made within one pay period of the end of the year.

Keep in mind that neither salary nor job title in and of themselves make an employee “exempt”. In addition to meeting the minimum salary threshold, an employee must meet the “duties test” and fall under one of the applicable categories:

  • Executive Employees.
  • Administrative Employees.
  • Learned Professionals.
  • Creative Professionals.
  • Computer Employees.
  • Outside Sales Employees.
  • Highly Compensated Employees.

There will also be no automatic updates to the salary threshold, as set in the prior blocked 2016 rules. All employers should examine their exempt employees and verify that the employees will remain exempt under the new 2020 rules based on salary, but an overview of the duties test as it matches up with Job Descriptions and actual duties should be an ongoing exercise. All InTANDEM HR clients took steps to ensure compliance with the 2016 ruling at the time, so this lower threshold is a good time to revisit your exempt employee’s job duties as well as salaries. Contact InTANDEM HR with any questions regarding this new ruling or to obtain an “FLSA Test”.  

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Colorado reverses decision on “use it or lose it” Vacation

A Colorado appellate court recently upheld an employer’s policy requiring forfeiture of accrued, unused vacation at separation of employment, finding the policy did not violate the Colorado Wage Claim Act. This reverses most HR and Employment Law persons interpretation of the Colorado Court of Appeals and the Colorado Department of Labor and Employment’s written guidance from 2015, which advised that so-called “use-it-or-lose-it” vacation policies are permissible, but that they cannot operate to deprive employees of earned vacation time.  Since that 2015 ruling, all employers in Colorado were likely advised to abandon any “use it or lose it” vacation policy in favor of one that pays out any accrued vacation balance upon separation of employment, for any reason. Colorado employers now have sound legal authority supporting policies requiring forfeiture of accrued vacation at separation and for use-it-or-lose-it vacation policies.

In Nieto v. Clark’s Market, Inc., the Colorado Court of Appeals affirmed the dismissal of an employee’s claim for vacation pay against her former employer.  The company’s policy provided that employees are entitled to payment of accrued, unused vacation time if they voluntarily resign with two weeks’ notice, but if the employee is terminated or resigns with less than two weeks’ notice, the employee “forfeits all earned vacation pay benefits.” The company in this case terminated the employee’s employment (i.e., she did not voluntarily resign) and did not pay out her accrued vacation based on its policy. 

The court rejected the former employee’s argument that her vacation pay was earned, and the court found that the company’s policy did not violate the Wage Claim Act’s anti-waiver section, which prohibits any agreement that purports to waive an employee’s rights under the statute.

Based on this decision, Colorado employers may implement and enforce “use it or lose it” vacation policies that provide for forfeiture of unused vacation at termination or condition payout of vacation on the employee’s meeting certain conditions, such as resigning voluntarily with appropriate notice. However, such policies are still not advisable from the perspective of what the majority of employees expect, what most employers offer, and keeping in mind that a former employee is still able to post reviews on Glassdoor to include things like time off and compensation. If a business does want to change their policy to use it or lose it, they should instead consider adopting policies that “cap” time.

Consider also that absent a statement that vacation will not be paid at separation, the employer’s policy could be interpreted to require payment.  Colorado employers should review their policies to ensure they affirmatively state how unused vacation will be handled at termination, and ensure actual practice is consistent with those policies.  

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Uniform Law in Colorado

For employees and employers covered by the Colorado Minimum Wage Order the following applies:

  • Where the wearing of a particular uniform or special apparel is a condition of employment, the employer shall pay the cost of purchases, maintenance, and cleaning of the uniforms or special apparel.
  • If the uniform furnished by the employer is plain and washable and does not need or require special care such as ironing, dry cleaning, pressing, etc., the employer need not maintain or pay for cleaning.
  • An employer may require a reasonable deposit (up to one-half of actual cost) as security for the return of each uniform furnished to employees upon issuance of a receipt to the employee for such deposit. The entire deposit shall be returned to the employee when the uniform is returned. The cost of ordinary wear and tear of a uniform or special apparel shall not be deducted from the employee’s wages or deposit.
  • Clothing accepted as ordinary street wear and the ordinary white or any light colored plain and washable uniform need not be furnished by the employer. If a special color, make, pattern, logo or material is required, the employer must furnish the uniform.
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California update – National Origin Discrimination Protection

On July 1, new regulations that clarify protections from national origin discrimination will go into effect in California. The new regulations are extensive and include clarifications on the definitions of “national origin” and “national origin groups,” the permissible and prohibited types of employer policies governing language restrictions in the workplace, the permissible and prohibited inquiries regarding immigration status, and the permissible and prohibited types of height and weight requirements for work.  

Definitions

The new regulations clarify that the definition of “national origin” includes an individual’s actual or perceived:

  • Physical, cultural, or linguistic characteristics associated with a national origin group.
  • Marriage to or association with persons of a national origin group.
  • Tribal affiliation;  
  • Membership in or association with an organization identified with or seeking to promote the interests of a national origin group;
  • Attendance or participation in schools, churches, temples, mosques, or other religious institutions generally used by persons of national origin group; and
  • Name that is associated with a national origin group.

The Equal Employment Opportunity Commission (EEOC) and various courts have provided the following examples of the types of associational and perception-based harassment and discrimination based on national origin that are prohibited:

  • Harassment of an employee whose husband is from Afghanistan.
  • Refusal to promote an employee because he attends a mosque.
  • Harassment of a Hispanic person by a harasser who perceived that the individual was Pakistani.
  • Co-workers repeatedly referring to an employee of Indian descent as “Taliban” or “Arab.”
  • Harassment of a Sikh man wearing a turban because the harasser perceived him to be Muslim.

The regulations also provide that “national origin groups” include “ethnic groups, geographic places of origin, and countries that are not presently in existence.” In other guidance from the EEOC, the commission has explained that a geographic region may include “a region that never was a country but nevertheless is closely associated with a particular national origin group, for example, Kurdistan or Acadia.”

Language Restrictions

Since 2001, California has prohibited employers from adopting or enforcing a policy that limits or prohibits the use of any language in the workplace, unless a business necessity justified the restriction and the employer met certain notice requirements. According to the new regulations, if an employer has a policy limiting or prohibiting the use of a language, the employer now has to meet a third requirement and also show that the restriction is “narrowly tailored.” Also, a language restriction that “merely promotes business convenience or is due to customer or co-worker preference” will not pass the test. Colorado has a similar law.

The new regulations also specifically target “English-only rules,” stating that they are presumptively illegal unless the employer can meet the three-part test by proving that the rule is justified by business necessity, is narrowly tailored, and was effectively explained to employees.

“Business necessity” is defined as an overriding legitimate business purpose, such that “(A) [t]he language restriction is necessary to the safe and efficient operation of the business; (B) [t]he language restriction effectively fulfills the business purpose it is supposed to serve; and (C) [t]here is no alternative practice to the language restriction that would accomplish the business purpose equally well with a lesser discriminatory impact.”

The new regulations also state that “English-only rules are never lawful during an employee’s nonwork time,” such as breaks, lunch, and unpaid employer-sponsored events. The FEHC further commented in the regulation making process that an employer’s attempt to restrict language use during nonworking hours may involve sufficient employer “control” over that time to make it compensable. 

Immigration-Related Practices

The new regulations also place several restrictions on immigration-related practices. For example, an employer cannot make inquiries into an employee’s immigration status “unless the person seeking discovery or making the inquiry has shown by clear and convincing evidence that such inquiry is necessary to comply with federal immigration law.” It is also unlawful for an employer to discriminate or retaliate against an employee because of the employee’s immigration status, “unless the employer has shown by clear and convincing evidence that it is required to do so in order to comply with federal immigration law.”

Height and Weight Requirements

The new regulations expressly state that height and weight requirements may be unlawful because they may have the effect of discriminating based on national origin. Where an employee shows that a height or weight requirement has an adverse impact, the requirement is unlawful unless it is job related and justified by business necessity, and its purpose cannot be achieved as effectively through other means. 

Ensure that your policies and practices comply with these regulations by contacting InTANDEM HR.

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New ID Theft Protection

InTANDEM HR is excited to announce a new, enhanced identity theft protection product, LifeLock. We are replacing our current “ID Watchdog” benefit with LifeLock effective July 1, 2019.

LifeLock has two levels of protection against identity theft, the “LifeLock Benefit Elite Plus” and “LifeLock Benefit Elite Premium” plans. Pricing for the Elite Plus plan is just $5.99 per month for employee only coverage, and $11.98 for employee plus family.  The Elite Premium plan is a low monthly charge of $12.49 for employee or $24.98 for employee plus family.   These benefits are a post-tax employee payroll deduction. Please see the attached flyer which explains the benefit differences and what the coverage can do for you and your family members to thwart would be and actual identity theft criminals.

What does this mean to you? If you are currently enrolled in ID Watchdog you have the option of cancelling your identity protection entirely, or enrolling in either of the new LifeLock Benefit plans. Please email lharper@intandemhr.com no later than June 30, 2019 with your decision to cancel, enroll, and at which coverage level (employee only or employee + 1 or more family member). If you do not respond by June 30 you will be automatically enrolled in LifeLock Benefit Elite Premium plan at the same coverage level. You will not be able to modify this election until open enrollment (January 1st effective date year year).

We will no longer offer the ID Watchdog product after June 30, 2019. We trust you will find the improved LifeLock product to be a more robust option for protecting against and restoring any actual stolen identity theft.

Please contact InTANDEM HR at 303.955.7615 if you have any questions.

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HSA Limits increase for 2020

Health savings account (HSA) contribution limits for 2020 are going up $50 for self-only coverage and $100 for family coverage, the IRS announced May 28th.

The annual limit on HSA contributions will be $3,550 for self-only and $7,100 for family coverage (versus the current $3,500/7,000 in 2019).

In Revenue Procedure 2019-25, the IRS confirmed HSA contribution limits effective for calendar year 2020, along with minimum deductible and maximum out-of-pocket expenses for the HDHPs with which HSAs are paired. InTANDEM HR will post the new limits in our open enrollment materials for the 2020 year.

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New Legislation in Colorado

Governor Polis has recently signed two pieces of legislation in to law.

“Ban the box”. Colorado has now become the 12th state to prohibit employers in the public and private sector from asking about criminal history on job applications. Any reference that asks an employee about criminal history – felonies, misdemeanors, arrests, etc. must be removed from any employment application that is being used, electronic or otherwise. Employers can still run background checks if they customarily do so on all prospective hires that they are offering employment to on a contingent basis.

“The Equal Pay for Equal Work Act”  provides protections and promotes equity for workers of all genders to attempt to equalize pay protections. This is a good reminder for all employers to review each of their workers’ wages to ensure that similar workers are being paid for similar work.