Dakota Hebert, Author at Checkwriters

October 21, 2024

IRS Guidance on QSLPs under SECURE 2.0 Act: Notice 2024-63

On August 19, 2024, the IRS released interim guidance regarding employer matching contributions for employees’ qualified student loan payments (QSLPs) under Section 110 of the SECURE 2.0 Act. The guidance, issued in a Q&A format in Notice 2024-63, covers several key topics to assist employers, including the types of eligible retirement plans that can feature a QSLP match, the definition of QSLPs, certification requirements for QSLPs, reasonable procedures for implementing QSLP matches, and the frequency of employer QSLP matches. Although Section 110 applies to contributions for plan years beginning after December 31, 2023, many employers were waiting for further IRS guidance before considering this optional feature for their workforces.

For employees, this feature offers the dual benefit of saving for retirement while focusing on student loan repayment. For employers, offering QSLP matching can be a powerful tool for attracting and retaining younger talent. However, employers should be aware of the additional costs and responsibilities associated with implementing this feature, including plan amendments, administrative and operational costs for tracking QSLPs, recordkeeping, employee communication and engagement, and potentially higher overall contribution expenses due to increased employee participation.

Key Takeaways for Employers:

Optional Feature: Employer matching contributions for QSLPs are not mandatory. However, employers who choose to implement this provision must make it available to all employees eligible for matching contributions based on elective deferrals. Employers cannot limit QSLP matches to specific types of student loans, educational institutions, or degrees.
Eligible Plans: Retirement plans that can feature QSLP matching include 401(k) plans, 403(b) plans, SIMPLE IRAs under Section 408(p), and governmental 457(b) plans.
Plan Amendments: Employers are required to amend their retirement plans to incorporate the QSLP matching arrangement.
Employee Certification: Employees must certify that their student loan payments qualify as QSLPs. A QSLP is defined as “a payment made by an employee in repayment of a qualified education loan (as defined in Section 221(d)(1)) incurred by the employee to pay qualified higher education expenses, subject to the Section 401(m)(4)(D)(i) amount limitation and the Section 401(m)(4)(D)(ii) certification requirement.”
Certification Process: Plans may require a separate certification for each QSLP or permit an annual certification applicable to all QSLPs for a year. The required certification must include:
- The amount of the loan payment;
- The date of the payment;
- Confirmation that the payment was made by the employee;
- Confirmation that the loan being repaid is a qualified education loan used for qualified higher education expenses for the employee, the employee’s spouse, or the employee’s dependent; and
- Confirmation that the loan was incurred by the employee.
Reliance on Certification: Plans may rely on an employee’s annual certification without requiring supporting verification. However, plans may require verification that the student loan payment satisfies the QSLP requirements, provided the verification is conducted according to established reasonable procedures. One method of independent verification is allowing employees to make qualified education loan payments through payroll deduction.
Annual Contribution Limits: The total amount of an employee’s QSLPs for a given year is subject to the annual contribution limit and is reduced by the employee’s elective deferrals for the year.
Claim Deadlines: Plans may establish a single QSLP match claim deadline for the plan year or multiple deadlines, including, but not limited to quarterly deadlines, as long as each deadline is reasonable.
Contribution Frequency: QSLP matches can be contributed at a different frequency than elective deferral matches, provided that QSLP match contributions are made at least annually.
Effective Date: The notice applies to plan years beginning after December 31, 2024. For plan years before January 1, 2025, a plan sponsor may rely on a good faith, reasonable interpretation of Section 110 of the SECURE 2.0 Act. “The guidance in this notice is an example of a good faith, reasonable interpretation of section 110 of the SECURE 2.0 Act.”

The Treasury Department and IRS anticipate issuing proposed regulations with respect to Section 110 of the SECURE 2.0 Act, and invite public comment generally as well as on several topics highlighted in Notice 2024-63.

Disclaimer: The information contained herein is not intended to be construed as legal advice, nor should it be relied on as such. Employers should closely monitor the rules and regulations specific to their jurisdiction(s) and should seek advice from counsel relative to their rights and responsibilities.

January 24, 2024

What employers need to know about the new independent contractor rule

On January 10, 2024, the US Department of Labor (DOL) published its long-awaited final rule on independent contractor classification under the Fair Labor Standards Act (FLSA).

Background

Independent contractor classification has been a hot topic for years, particularly with the rise of the “gig worker” – an individual engaged in temporary or freelance work, and therefore outside of the typical employer-employee relationship.

According to Upwork’s Freelance Forward report, in 2022, 39% of the American workforce did some sort of freelance work—up three percentage points from 2021.

Considering this developing economic reality, the Trump administration DOL issued a rule in 2021 which sought to streamline independent contractor classification. The 2021 DOL rule highlighted two “core factors” employers should look to when determining independent contractor status:

The nature and degree of the worker’s control over the work
The worker’s opportunity for profit or loss

The 2021 DOL rule provided that if these two factors indicated the same classification result, then there was a substantial likelihood that such classification was correct.

Conversely, the prior Obama-era rule outlined six factors employers must look to when determining independent contractor status. The new independent contractor rule from the Biden administration DOL effectively overturns the 2021 Trump administration DOL rule, and reinstates the Obama-era rule.

But, at the heart of the classification inquiry under both rules is whether, as a matter of economic reality, a worker is economically dependent upon the business to which it renders service.

What is the new independent contractor rule?

The new independent contractor rule features six factors which guide the determination of whether a worker is an independent contractor (in business for himself) or is economically dependent upon the employer for work and therefore an employee under FLSA.

Again, the new independent contractor rule is effectively reinstating worker classification guidance as understood prior to the 2021 Trump administration DOL rule.

The new independent contractor rule is effective March 11, 2024.

What are the six factors to determine independent contractor status?

The “Economic Realities” test under the new independent contractor rule features six factors for employers to use in determining worker status. The six factors are:

Worker opportunity for profit or loss depending on managerial skill
Worker and potential employer investments
Degree of permanence of the working relationship
Nature and degree of control of employer over work
Extent to which the work is performed is integral to the employer’s business
Use of the skill and initiative of the worker

The new independent contractor rule also provides additional analysis of the “control” factor (number four) including detailed discussions of how scheduling, supervision, price-setting, and the ability to work for others should be considered.

Backlash to new independent contractor rule (ABC test, potential legal action)

Employers in states like California, Massachusetts, and New Jersey are likely familiar with the
“ABC” test for determining independent contractors. This requires that all three factors of a three-factor test be met in order for a worker to be classified as an independent contractor.

Per the FAQs released by the DOL, the Final Rule does not adopt an “ABC” test. Nonetheless, with its goal of minimizing worker misclassification, there is concern that the analysis under the Final Rule may lean towards finding an employment relationship under the FLSA, and therefore may have significant impact on companies in their use of independent contractors.

Indeed, House of Representatives Small Business Committee Chair, Rep. Roger Williams, sent a letter to Acting Secretary of Labor Julie Su last week lambasting the new rule as “threaten[ing] the livelihood of many small-business owners by reimplementing a confusing multifactor analysis to determine whether a worker is an [independent contractor] or an employee … as a result, businesses are less likely to hire gig workers with a fear of increased misclassification lawsuits.”

According to Inc. Magazine Policy Correspondent Melissa Angell, various business groups like the Coalition for Workforce Innovation, Associated Builders and Contractors, and the US Chamber of Commerce are also seeking action to block the rule.

How should employers prepare for the new independent contractor rule?

Employers should note that the rule only revises the DOL’s interpretation under the FLSA, and has no effect on other laws—federal, state, or local—that use different standards for employee classification.

In preparation for this new independent contractor rule that takes effect March 11, 2024, employers should consider taking the following steps:

For further details, employers should consult the Department of Labor, Wage and Hour Division website which includes several resources for employers including: Final Rule; FAQs; A Guide for Small Entity Compliance, which includes examples of each of the six factors and common questions; Press Release on January 9, 2024 announcing the Final Rule; and Notice of Proposed Rulemaking published on October 13, 2022 issued prior to the final rule.
Employers should carefully evaluate their current use of independent contractors in light of the multifactor analysis required by the Final Rule, and should audit their current service providers to ensure proper classification.
As a result of such audit, employers may be required to update independent contractor agreements (though a written agreement alone is not dispositive of status) and internal policy and practices regarding independent contractors.
Employers should closely monitor any legal challenges to the rule which are expected.

November 28, 2023

2023 Guide to the FUTA tax and FUTA Credit Reduction States

Employers pay a variety of federal, state, and local taxes. One of these taxes is Federal Unemployment Tax – more commonly referred to in payroll parlance as “FUTA.”

All employers must pay FUTA, which funds the Federal Unemployment Trust Fund administered by the Department of Labor (DOL). The FUTA tax rate is 6%, and employers can usually receive a FUTA tax credit of 5.4%. Employers in some states may owe more tax due to what’s known as a FUTA tax credit reduction.

This article will provide some background on FUTA and the FUTA tax credit, and then review which states are considered FUTA tax credit reduction states in 2023.

What is the FUTA tax?

Under the Federal Unemployment Insurance Tax Act (FUTA), the federal government levies a tax on employers covered by a state’s unemployment insurance program to fund the Federal Unemployment Trust Fund administered by DOL.

The fund is used to supplement the cost of extended unemployment benefits during times of high unemployment. It also serves as a loan resource which states may borrow from to pay unemployment insurance benefits to their residents. The FUTA tax covers the administration costs for all unemployment insurance and job service programs in all states.

The standard FUTA tax rate levied on employers is 6% applied to the first $7,000.00 in wages paid by the employer to the employee (FUTA wage base). However, employers may receive a FUTA tax credit of 5.4% when they file their annual Form 940 Return if they pay their state unemployment taxes in full, on time, and the state is not determined to be a credit reduction state.

What is a FUTA credit reduction?

Depending on which state you operate in, you may end up with a higher FUTA tax.

This is because some states have outstanding balances on loans taken from the Federal Unemployment Trust Fund. If that’s the case, the 5.4% FUTA tax credit employers typically enjoy is reduced.

Specifically, if states have outstanding loan balances on January 1 for two consecutive years, and do not pay the full balance by November 10 of the second year, then the FUTA tax credit is reduced until the loan is repaid in full. This results in a higher tax due from the employer on its annual Form 940 return.

Which states/jurisdictions have a FUTA credit reduction in 2023?

California, New York, and the US Virgin Islands have a FUTA credit reduction for 2023.

Employers in California and New York will be subject to a 0.6% credit reduction. This means employers in those states will pay an effective FUTA tax rate of 1.2%.

Employers in the US Virgin Islands will be subject to a 3.9% credit reduction. This means employers in that jurisdiction will pay an effective FUTA tax rate of 4.5%.

Employers in California, New York, and the US Virgin Islands should plan accordingly for the higher FUTA tax liability for 2023. Remember, increased FUTA tax liability is assessed in Quarter Four and due by January 31 of the following year.

What is the amount of the FUTA credit reduction?

The amount the credit is reduced is .3% per year, for each year the loan remains unpaid.

Additional resources for employers subject to the FUTA tax credit reduction can be found on the IRS website as well as the U.S. Department of Labor website.

Disclaimer: The information contained herein is not intended to be construed as legal advice, nor should it be relied on as such. Employers should closely monitor the rules and regulations specific to their jurisdiction(s) and should seek advice from counsel relative to their rights and responsibilities.

November 20, 2023

How to Protect Your Organization from Direct Deposit Fraud

Companies are getting scammed out of tens of thousands of dollars at a time, and some don’t notice for days and even weeks.

Employers and HR Professionals are often the targets of malicious hacking attempts – usually through suspicious-looking emails that attempt to garner and/or change personal financial information. These scams are known as “business email compromise” (BEC).

More and more organizations are reporting cases of direct deposit fraud or near-misses. This article will provide you with some tips on how to recognize payroll direct deposit scam emails, particularly as they increase through the holiday season.

What is Business Email Compromise?

Imagine you receive an email requesting an urgent change to direct deposit information. If you or another administrator changes account numbers, multiple pay periods could pass before the individual realizes either part or all of their paycheck has been diverted into an alternate account.

The above is an example of business email compromise, where the individual whose paycheck was diverted never really requested the change. Instead, the change was requested by a bad actor impersonating the individual.

“Business email compromise is a serious threat targeting payroll operations, and it’s important for people to remain vigilant as perpetrators continually change their skills and tactics,” says Liz Boyer, Risk Mitigation Officer at Checkwriters. “For example, recent reports – like this one from cybersecurity provider Frontra – show that criminals are now using generative AI to create more deceptive emails to target victims. It’s easier than ever for fraudsters to pull off these attacks.”

Tips to Prevent Business Email Compromise

What can you do about it? This is where everyone in the organization plays the role of human firewall!

Always treat requests for money or sensitive information with a high degree of skepticism.
Slow down and think critically.
Verbally confirm with the sender that the request is legitimate (verbally is the key word – if you respond to the email asking for confirmation, you’re likely responding directly to the scammer).
Never assume a request is legitimate even if it comes from someone within your organization. Stay alert for anything out of the ordinary, and if you need more information, just ask!

Policies to Prevent Business Email Compromise

This also highlights the importance of maintaining strict policies when it comes to the personal financial information of employees.

Direct Deposit account changes should only occur after a Direct Deposit Authorization Form is completed and signed, and, ideally, following a verbal confirmation of the requested change.
Some organizations use the “four eyes principle” which requires two different people to sign off on major transactions.

“BEC is sophisticated because it avoids the use of malicious programs. Instead, it uses the victim’s trust to trick them into making fraudulent transactions,” says Youssef Karami, Director of IT Infrastructure at Checkwriters.

How to identify a fraudulent email

There are several tell-tale signs that the email you’re looking at is suspicious, and that the sender is attempting to commit direct deposit fraud.

Victims often report that it was “obvious” the request was a payroll direct deposit scam once they looked back at the email. Of course, hindsight is 20/20, and what matters is that payroll and HR professionals are on the lookout for red flags before any action is taken.

Some things to look out for include mismatched names and emails, a sense of urgency to the request, signature issues, and lack of a voided check or bank form.

From Name and Email Address Mismatch

Check out the screenshot below. If the “From Name” does not match the email address, it’s a red flag and should raise immediate concerns about the authenticity of the request.

Sense Of Urgency

Fraudulent payroll direct deposit change requests are often marked by phrases like “this is urgent” or “please change my direct deposit immediately.”

This should raise the question, “what’s the rush?” Of course, urgent payroll requests exist, but fraudsters deliberately try to speed up the process. Any request containing these or similar words or phrases should raise a red flag.

Issues With the Signature

If the direct deposit change request includes a form attachment, look at the signature. While electronic signatures are very common, they should be viewed with suspicion until the request is verified.

Also, sloppy errors like spelling mistakes or the first and last name in reverse order are red flags (see example below).

No Voided Check

It’s highly recommended to require a voided check or bank encoding form with a payroll direct deposit change request. If these are not included – as in the example below – then you should be suspicious of the request. These inclusions allow you to verify the address and/or name on the check or bank encoding form match the employee’s demographics.

Similarly, you should pay close attention to the SSN provided and verify that with the information you have on record.

Mismatched email domains

If the email claims to be from a reputable company, like Microsoft or your bank, but the email is being sent from another email domain like gmail.com, or microsoftsupport.ru it’s probably a scam. Also be watchful for very subtle misspellings of the legitimate domain name. Like micros0ft.com where the second “o” has been replaced by a 0, or rnicrosoft.com, where the “m” has been replaced by an “r” and a “n”. These are common tricks of scammers.

Suspicious links or unexpected attachments

If you suspect that an email message is a scam, don’t open any links or attachments that you see. Instead, hover your mouse over, but don’t click, the link to see if the address matches the link that was typed in the message. In the following example, resting the mouse over the link reveals the real web address in the box with the yellow background. Note that the string of numbers looks nothing like the company’s web address.

Conclusion

Payroll direct deposit scams are very common, and organizations across all industries have reported being targeted.

Payroll and HR professionals should always be suspicious of change requests until these requests are verified. You can do this through a phone conversation, face-to-face, or through another trusted, secondary form of communication.

In the meantime, pay close attention to the “red flag” items covered in this article, as they’ll serve as a first line of defense against those targeting you and your employees.

Here is an additional resource from Microsoft on protecting yourself from phishing.

July 8, 2021

Leading bioscience company discovers Checkwriters a positive HR match

“Checkwriters Onboarding has helped us grow to a few dozen employees to a few hundred employees in multiple states.” Mariana Martinez, HR Manager, MicroGenDX

Mariana Martinez and Alysa Medina – HR and Operations leaders at national bioscience company MicroGenDX – were searching for a new Payroll and HR platform that could grow with their organization while providing the accessible service they weren’t receiving with their previous national provider.

In addition, they needed robust Reporting and Analytics tools, an interactive Onboarding experience that could be deployed on a national level to standardize their hiring processes and be customized to the states they operated in, and a Performance Management application to replace their antiquated and cumbersome paper employee evaluation forms.

In May 2021, we sat down with Mariana and Alysa at the Orlando, FL headquarters of MicroGenDX, where they shared how they met Checkwriters Account Executive Steve Lanzit and Sales Manager James LeDuc at the SHRM Annual Conference and Expo, and why they ultimately chose Checkwriters as their Payroll and HR partner despite the dozens of competitors available.

Industry: Private sector; bioscience

Location: Orlando, FL; Lubbock, TX

Size: 250 employees

Customer since: October 2018

Checkwriters product level: HR Premier + Benefits; Applicant Tracking; Performance Reviews and Management; Carrier Connect

ABOUT: MicroGenDX is a global leader in NGS diagnostics in infection and has run over 500,000 next-gen DNA sequencing tests at their state-of-the-art, CAP-accredited, CLIA-licensed molecular diagnostic facility. The company employs over 200 passionate employees, with a leadership model that swiftly adapts to global health concerns and new technologies.

microgendx.com

May 28, 2021

Massachusetts updates premium pay under blue laws

Massachusetts has made several revisions to its “blue laws” that require most employers that are retailers to pay premium pay for work on certain holidays. First, the Commonwealth has designated Juneteenth Independence Day, June 19, as a legal holiday. Second, the gradual phase-out of premium pay now applies to all holidays that require premium pay. When the legislature originally crafted the phase-out, it forgot to include New Year’s Day, Columbus Day, and Veterans Day; it has now corrected that omission.

Holidays That Require Premium Pay

Employers that are retailers of any size are required to pay premium pay for the hours worked on the following holidays:

New Year’s Day
Columbus Day after 12:00 noon
Veterans Day after 1:00 p.m.

Employers that are retailers and have eight or more employees (including the owner) are also required to pay premium pay on the following holidays:

Memorial Day
Juneteenth Independence Day
Independence Day
Labor Day

If New Year’s, Juneteenth, Independence Day, or Veterans Day is on Sunday, then premium pay also applies to hours worked on the following Monday.

Rate of Premium Pay

For the remainder of 2021, the premium pay rate is 1.2 times the employee’s regular rate. (The higher rate of 1.5 times applied to New Year’s Day this year because the legislature didn’t fix its mistake until after January 1, 2021.) For 2022, the premium pay rate will be 1.1 times the employee’s regular rate. As of January 1, 2023, retailers no longer have to pay premium pay for work on holidays.

Additional details are available on the Massachusetts Attorney General’s blue laws guide here.

SOURCE: HR Support Center

May 28, 2021

New York HERO Act: additional workplace safety requirements for employers

On May 5, Governor Cuomo signed the New York Health and Essential Rights Act (NY HERO Act). This new law imposes additional workplace health and safety requirements on New York employers and coincides with New York’s May 19 adoption of CDC guidance allowing for office capacity in that state to increase from 50% to 75%.

While the law as written sounds burdensome, employers should be aware that it was signed with an understanding between the governor and the legislature that it would be amended to address concerns from the business community. As such, several amendments currently in the legislative process would significantly alleviate the law’s more onerous provisions. We have noted these amendments in italics within each applicable section.

Effective dates

The law is scheduled to take effect June 4, 2021. However, an amendment pushes the effective date to July 5, 2021.

“Airborne infectious disease exposure prevention plan” and model standard

One of the main components of the law is the requirement that employers create a written “Airborne infectious disease exposure prevention plan” comprising workplace health and safety standards. The New York State Department of Labor (NYS DOL) is also required to publish a model standard outlining minimum requirements. These minimum requirements would address the following, with consideration of industry differences:

Health screenings
Face coverings
Workplace hygiene stations
Social distancing

Importantly, employers can simply adopt the NYS DOL’s model standard for their industry rather than creating their own custom plan. A custom plan would need to meet or exceed the plan put forward by the NYS DOL.

The law as currently written suggests that employers must immediately implement such a plan. However, an amendment provides a time frame of “within 30 days after the [NYS DOL] publishes the model general standard and the model standard relevant to the industry.”

The plan must be posted in a visible and prominent location, and employees must be provided a written copy once the policy is adopted, as well as a copy following reopening after a related closure. New employees must also be provided a copy upon hire.

An amendment allows the employer more time to provide written notice: within 30 days following adoption of the policy and within 15 days following reopening after a related closure. Further, the amendment clarifies that the policy need not be posted in a vehicle that would otherwise qualify as a work site.

Employer retaliation prohibitions and penalties / fines

Employers can face significant penalties of up to $50.00 per day for failure to adopt a plan, and fines of $1,000.00 – $10,000.00 for failing to follow an adopted plan.

The law also prohibits employers from discriminating or retaliating against employees who report violations of the law or adopted plan, report concerns about exposure, or refuse to work based on a reasonable good-faith belief that working conditions pose risk of exposure. Employees are also given the ability to take legal action against their employer for related violations.

However, the amendments limit legal action by employees by noting that the violation by the employer must put the employee at risk of “death or serious physical harm,” for the employee to take legal action. Further, the employer is given a 30-day window to address potential violations; if the violation is “cured” during this time, the employee can no longer take legal action.

Workplace safety committees

Unlike other provisions of the law, this specific requirement takes effect November 1. It requires private New York employers with 10 or more employees to allow their employees to establish joint employer-employee “workplace safety committees.” These committees must be made up of “non-supervisory employees,” with the power to:

Bring health and safety concerns to the employer’s attention
Review related workplace policies
Participate in site visits from a government entity
Attend workplace health and safety standards training

The members of the committee must be selected by “non-supervisory employees,” and employers cannot interfere with the selection process nor retaliate against employees for participating. In workplaces with a collective bargaining agreement in place, the employee representative is responsible for selection of workplace safety committee members.

Amendments to the workplace safety committee requirement:

If employers already have a safety committee in place that is consistent with the new law’s requirements, then employers are not required to permit the formation of an additional (redundant) committee.
The committee’s purview is broad in the law; an amendment limits the committee’s purview to only “provisions of the [NY HERO Act] relating to occupational safety and health.”
The law allows workplace safety committees to meet during work hours at least once per quarter; however, an amendment stipulates that such meetings cannot be longer than two hours. Also, the training that committee members are permitted to attend without loss of pay cannot be longer than four hours.

Action items for New York employers

Review – and potentially update – your existing workplace safety plan, and ensure it is prominently displayed in each work site.
Distribute your existing workplace safety plan and highlight the necessity of compliance in light of new regulations.
Notify ownership, managers, and human resources about requirements of the upcoming NY HERO Act.
Monitor guidance and/or publishing of model standards by NYS DOL.

April 20, 2021

It’s fun to “Pay” at the YMCA helps nonprofit customize Payroll + HR

“Dealing with Checkwriters was such a breath of fresh air. The most surprising thing about making the transition was the ease of it! Their system is robust, but very cost effective. I recommend you take a look.”

Jannel Hill – HR Leader at the YMCA – was searching for a Payroll and HR solution that could be adapted to a large nonprofit organization. She also needed a system that could accommodate the unique Payroll and HR needs of her team, like employees who worked multiple jobs at different rates of pay.

In addition, Jannel was looking for Applicant Tracking + Onboarding, Benefit Enrollment, and an Employee App that all functioned together under the same Payroll and HR platform.

In April 2021, we sat down with Jannel at India Point Park in Providence, Rhode Island where she shared her experience with the Checkwriters Sales, Onboarding, and Service teams, and how Checkwriters helped her team at the Y by offering a more customizable approach to Payroll and HR!

April 20, 2021

Virginia minimum wage increases May 1

Virginia’s minimum wage will increase from $7.25 to $9.50 per hour effective May 1, 2021.

This is part of a series of scheduled minimum wage increases brought about by legislation passed by the Virginia General Assembly in 2020. The legislation raises the state minimum wage to $15.00 per hour by 2026 as well as eliminates various minimum wage exemptions like small employers, nannies, and piece-rate workers.

Tipped wages continue to follow the state minimum cash wage payment under the federal Fair Labor Standards Act at $2.13 per hour. However, “tipped employees” in Virginia are considered employees who regularly receive over $30.00 per month in tips.

April 19, 2021

New York legalizes “recreational use” cannabis: implications for employers

On March 31, 2021, Governor Cuomo signed into law the Cannabis/Marijuana Regulation and Taxation Act, providing a framework for the state-sanctioned sale and recreational use of cannabis. The law became effective immediately, so New York employers should be aware that it offers significant employment protections to cannabis users.

Because the system for legal purchase has not yet been set up – and won’t be until 2022 – New Yorkers cannot currently purchase cannabis. However, the law does authorize the immediate use of cannabis, as well as its possession (up to 3 ounces, or 24 grams concentrated).

The law adds cannabis to New York’s existing lawful off-duty conduct law but carves out a few exceptions. As a refresher, the lawful off-duty conduct law prohibits discrimination against an applicant or employee for engaging in activities or consuming products that are legal, as long as they do so off duty and off the employer’s premises. As a result, employers can’t refuse to hire an applicant or discipline or terminate an employee because they use cannabis outside of work unless one of the following exceptions applies:

The employee is impaired by cannabis during work (see below);
The employer would violate a federal law or lose a federal contract or federal funding; or
The employer’s action is required by federal or state law or mandate

To be considered impaired by cannabis during work, an employee has to show “specific articulable symptoms” that either negatively affect their work performance or interfere with the employer’s ability to provide a safe workplace. This means that minor physical symptoms (such as bloodshot eyes) are likely not grounds for adverse action if the employee’s job is not safety sensitive.

Note that while medical cannabis patients were already protected by state disability discrimination law, these more expansive protections apply to them as well.

Since marijuana is only legal in New York for those 21 and older, employees who are under 21 do not have these employment protections.

Employer steps

Employers should review their drug policies and testing procedures and modify them as needed to ensure compliance with the new law. Employers should no longer test applicants for THC (the psychoactive ingredient in cannabis) unless they are required to do so under a different law, a federal contract, or a federal grant. Likewise, if an employer becomes aware of an applicant or employee’s off-duty use, they must refrain from taking action unless one of the exceptions applies.

SOURCE: HR Support Center

April 19, 2021

Illinois passes criminal history, pay data reporting, and equal pay legislation

Illinois has passed sweeping legislation that amends a series of existing state laws, including the Illinois Human Rights Act, the Illinois Equal Pay Act, and the Illinois Business Corporation Act, and places new obligations on employers. Specifically, the legislation restricts employers from considering criminal convictions when making hiring and employment decisions, imposes new pay data state reporting requirements, and requires employers to obtain a certification that they are complying with federal and state equal pay laws.

While the pay data reporting requirements take effect January 1, 2023 and the equal pay certificate requirement takes effect March 24, 2024, the restrictions on consideration of job applicants’ criminal records take effect immediately. This post addresses the immediate employer concern of complying with the criminal records portion of the legislation.

Employee criminal records legislation

The legislation amends the Illinois Human Rights Act to restrict employers from considering criminal convictions when making hiring and employment decisions unless an exception applies. If an exception does apply and the employer wants to screen an applicant or take adverse action against an employee based on their conviction record, they must conduct an interactive assessment. The law applies to all employees in Illinois, regardless of the size or location of their employer. The Illinois Department of Human Rights has provided an FAQ here.

Employers may only consider a conviction record if:

The conviction has a “substantial relationship” to the position; or
Hiring or retaining the employee would create an “unreasonable risk” to property or to the safety or welfare of others.

A conviction record is “substantially related” to the position if the position will provide the employee an opportunity to engage in the same or a similar criminal offense and the circumstances leading to the offense will arise during employment. For example, there would be a substantial relationship between a conviction for theft and a valet position, but not a substantial relationship between a drug possession conviction and a position stocking shelves.

“Unreasonable risk” is not defined, but the IL Department of Human Rights indicates that an employer must assess the risk that the employee poses in the particular position and determine whether the risk is unreasonable under the circumstances.

When assessing whether the conviction is substantially related and the person poses unreasonable risk, employers must consider all of the following:

Length of time since the conviction;
Number of convictions that appear on the conviction record;
Nature and severity of the conviction and its relationship to the safety and security of others;
The facts or circumstances surrounding the conviction;
The employee’s age at the time of the conviction; and
Rehabilitation efforts.

Note that Illinois already prohibited discrimination based on applicant or employee’s arrest record.

Interactive Assessment

If an employer still wants to use the conviction record to disqualify an applicant or employee after considering the factors above, they are required to engage in an interactive assessment. This requires providing a notice with specific information (including the employer’s reason for disqualifying the applicant or employee) as well as allowing the applicant or employee time to respond. If a response is provided, it must be considered by the employer

If the employer decides that the applicant or employee is disqualified even in part because of the conviction, they are required to provide another written notice with this specific information.

For more information about the interactive process and what is required in the written notices, see the Illinois Arrest and Convictions Law page on the HR Support Center.

Action Items

Employers should ensure that anyone involved in hiring, or anyone with the power to take adverse action against an employee (likely most or all managers), is familiar with the law and understands both the analysis and the paperwork that it requires.

SOURCE: HR Support Center

March 31, 2021

IRS announces PPE is medical expense

The Internal Revenue Service has issued Announcement 2021-7, clarifying that amounts paid for certain personal protective equipment (PPE)—such as masks, hand sanitizer and sanitizing wipes—used for the primary purpose of preventing the spread of coronavirus (COVID-19) are deductible medical expenses.

Therefore, amounts paid for COVID-19 PPE that are not compensated for by insurance or otherwise are deductible, provided that the taxpayer’s total medical expenses exceed 7.5% of adjusted gross income.

Tax-favored accounts

Amounts paid for COVID-19 PPE are also eligible to be paid or reimbursed under:

Health flexible spending arrangements (FSAs);
Archer medical savings accounts (Archer MSAs);
Health reimbursement arrangements (HRAs); or
Health savings accounts (HSAs).

However, if an amount is paid or reimbursed under any of the above accounts, or any other health plan, it will not be considered a deductible medical expense.

Plan amendments

Group health plans (including health FSAs and HRAs) may be amended pursuant to the announcement to provide for reimbursements of expenses for COVID-19 PPE incurred for any period beginning on or after Jan. 1, 2020, if certain requirements are satisfied.

March 16, 2021

American Rescue Plan Act: Increased FSA limits

One of the more noteworthy components of the American Rescue Plan Act (ARPA) – the latest COVID-19 relief legislation that was signed into law March 11 – is the increase in pretax contribution limits for dependent care flexible spending accounts (DC-FSAs) for calendar year 2021.

Background

The DC-FSA is a pretax benefit account that can be used to pay for a variety of services like day care, preschool, summer camps, and school programs. These DC-FSA funds can be used for expenses relating to children under age 13, or those incapable of self-care who live with the FSA holder more than half the year.

Elder care may also be eligible for reimbursement with a DC-FSA if the individual lives with the FSA holder at least eight hours of the day and is claimed as a dependent on the FSA holder’s federal tax return.

Employers can also choose to contribute to employees’ dependent care FSAs. However, the combined employer and employee contributions to a dependent care FSA cannot exceed the IRS limits.

New contribution limits

Under ARPA, the contribution limit for employer provided DC-FSAs is increased from $5,000 to $10,500 (or from $2,500 to $5,250 for married filing separately) for 2021.

According to Chatrane Birbal, Vice President for Public Policy at the Society for Human Resource Management (SHRM), that organization “worked with Congress to ensure maximum flexibility for dependent care FSAs. Providing this flexibility is warranted for employees since many child care services were suspended over the past year, leaving dependent care funds unused.”

Employer steps

For employees to take advantage, employers will need to amend their current DC-FSA. These amendments can be retroactive if adopted no later than December 31, 2021.

To amend a DC-FSA, employers will need to communicate with their plan administrator, and ensure updated elections for all DC-FSA enrollees who wish to increase their election. Employers will also need to communicate with their Payroll provider to ensure that corresponding payroll deductions are adjusted accordingly.

Is your DC-FSA administered by Checkwriters? Click here to email us if you would like to amend your plan >>

February 17, 2021

Checkwriters launches new logo and branding

We’re excited to announce the launch of our new logo and colors. While we’re still Checkwriters, and still primarily orange, here’s what’s changing as part of our brand refresh:

New Logo

Checkwriters now has a stand-alone logo independent of our company name. Our new logo is designed to represent our forward-thinking, positivity, and upward trajectory – all qualities we embody that put customer experience at the heart of everything we do! The combination of shapes form an abstract quill and alludes to the angle of a checkmark, reinforcing our name and illustrating our expertise and attention to detail.

New Colors

As you probably know, orange has long been our primary color – we’re keeping that consistent. However, we’ve added navy blue as our secondary color as well as some neon gradients you’ll notice in the logo, on our refreshed site, and in our software. While we’ve always been a Payroll company, our software also includes Applicant Tracking, Background Screening, Onboarding, Benefits, Attendance, HR + Compliance, and an Employee App! This range of additional colors will help us communicate the range of technology products we now offer.

The first places you’ll notice our new look is on our site and on the Checkwriters login page.

You’ll notice our brand refresh continuing over the next months – we’re looking forward to it!

We’re excited to announce the launch of our new logo and colors. While we’re still Checkwriters, and still primarily orange, here’s what’s changing as part of our brand refresh:

New Logo

New Colors

The first places you’ll notice our new look is on our site and on the Checkwriters login page.

You’ll notice our brand refresh continuing over the next months – we’re looking forward to it!

December 27, 2020

New coronavirus relief bill: key provisions for employers

On December 27, 2020, President Trump signed into law a new Coronavirus relief bill – the Consolidated Appropriations Act 2021 – which provides $900 billion in Coronavirus economic relief in addition to funding the federal government through September 2021.

The legislation extends and expands several provisions of the FFCRA and CARES Act which were scheduled to sunset on December 31, 2020. It also provides additional relief and clarification for key programs and tax credits available to employers to combat increasing financial strain precipitated by COVID-19.

Just as with the initial passage of the CARES Act and FFCRA this spring, implementing regulations and additional guidance from the federal government will be necessary to properly inform employers of the benefits available to them under this new legislation, as well as the protocol and procedures which employers must observe to effectively access them.

Checkwriters is closely monitoring the situation and will relay any additional guidance as soon as it becomes available. In the interim, please find below key provisions of the legislation especially relevant for employers and their workforces.

Enhanced Employee Retention Credit (ERC)

Extends the Employee Retention Credit through June 30, 2021.
Increases the credit rate of qualifiable wages from 50% to 70% (resulting in a maximum credit per employee of $14,000.00 up from $5,000.00).
Increases the employee creditable wage cap from $10,000.00 per year to $10,000.00 per quarter.
Reduces the decline in gross year-over-year receipts from 50% to 20% for qualification purposes.
Includes a safe harbor permitting employers to utilize gross receipts from the prior quarter in order to determine eligibility.
Increases the number of employees used to determine the relevant qualified wage base from 100 to 500. This enables employers with less than 500 employees to claim the ERC for all wages paid to employees irrespective of whether the employees were actively working or not. Previously, employers with more than 100 employees were permitted to claim the credit only as to compensation paid for services not performed by employees.
Permits new employers which were not in existence for all or some of 2019 to participate in the program and to claim the credit.
Expands the ERC to tax-exempt public colleges, universities and hospitals that are described in IRC § 501(c)(1).
Provides for retroactive application to the date of enactment of the CARES Act (March 12, 2020) for some provisions:For employers who received a Payroll Protection Program (PPP) loan, such employers may utilize the ERC relative to wages which were not paid with forgiven PPP Funds.Consistent with IRS guidance found in its COVID-19 Related ERC FAQs, health plan expenses constitute qualified wages for purposes of claiming the ERC even if no other cash wages were paid for the relevant period.Codification of previously-issued IRS guidance relative to the definition of gross income for certain tax-exempt organizations.Caution: Significant guidance from the Department of the Treasury will be required in order for employers to properly claim the ERC for wages paid for the retroactive period of March 12, 2020 through December 31, 2020. This is especially the case for those employers who have already filed for PPP loan forgiveness, and whose applications may include “qualifiable wages” for purposes of claiming the ERC.
For employers who received a Payroll Protection Program (PPP) loan, such employers may utilize the ERC relative to wages which were not paid with forgiven PPP Funds.
Consistent with IRS guidance found in its COVID-19 Related ERC FAQs, health plan expenses constitute qualified wages for purposes of claiming the ERC even if no other cash wages were paid for the relevant period.
Codification of previously-issued IRS guidance relative to the definition of gross income for certain tax-exempt organizations.
Caution: Significant guidance from the Department of the Treasury will be required in order for employers to properly claim the ERC for wages paid for the retroactive period of March 12, 2020 through December 31, 2020. This is especially the case for those employers who have already filed for PPP loan forgiveness, and whose applications may include “qualifiable wages” for purposes of claiming the ERC.

Families First Coronavirus Response Act

Employers are not required to provide paid sick and extended family leave under the Act after the original sunset date of December 31, 2020.
For employers who choose to provide paid leave consistent with the parameters of the FFCRA after December 31, 2020, employers may continue to claim the relevant payroll tax credits reimbursing themselves for such leave through March 31, 2021.
In order to qualify for the payroll tax credits, the leave paid by the employer has to be that “which would be so required to be paid if such Act were applied”, meaning the leave must conform to the requirements of the FFCRA including benefit amount, qualifying circumstances for leave, duration, and documentation requirements.
Employees may only exercise leave which would otherwise be available to them under the Act (during 2020), and which they have not already exhausted.For example, if an employee is entitled to 80 hours of emergency paid sick leave under the Act, and has already exhausted fifty (50) hours of such leave as of December 31, 2020, the employee would be eligible to use thirty (30) hours of emergency paid sick leave from January 1, 2021 through March 31, 2021, so long as the employer was willing to provide such leave, and the leave was exercised in accordance with the parameters of the FFCRA.
For example, if an employee is entitled to 80 hours of emergency paid sick leave under the Act, and has already exhausted fifty (50) hours of such leave as of December 31, 2020, the employee would be eligible to use thirty (30) hours of emergency paid sick leave from January 1, 2021 through March 31, 2021, so long as the employer was willing to provide such leave, and the leave was exercised in accordance with the parameters of the FFCRA.

Payroll Protection Program (PPP)

Significant changes have been made to the PPP including the ability for some businesses to apply for a “second draw” loan, and a reversal of the IRS’s position as to the non-deductibility of business expenses incurred or paid with PPP loan proceeds. The key changes under the new legislation are as follows:

The original Program has reopened for businesses who have not previously participated and will remain open until March 31, 2021.
Categories of eligible expenses under the Program have been expanded to include:Covered operations expenditures such as software, human resource, and accounting expenses;Covered property damage costs not otherwise covered by insurance and which resulted from public disturbances in 2020;Covered supplier costs for contracts for the sale of goods which were executed prior to the loan covered period; andCovered worker protection costs such as PPE required by federal health and safety guidelines for so long as COVID-19 remains a federal emergency.Group insurance payment costs (excluding health care costs) constitute forgivable payroll costs, such as group life, disability, vision, and dental insurance.Businesses are still required to meet the minimum spend requirements in order to achieve full forgiveness of their PPP loans, with a minimum of 60% of loan funds being expended solely for payroll costs.
Covered operations expenditures such as software, human resource, and accounting expenses;
Covered property damage costs not otherwise covered by insurance and which resulted from public disturbances in 2020;
Covered supplier costs for contracts for the sale of goods which were executed prior to the loan covered period; and
Covered worker protection costs such as PPE required by federal health and safety guidelines for so long as COVID-19 remains a federal emergency.
Group insurance payment costs (excluding health care costs) constitute forgivable payroll costs, such as group life, disability, vision, and dental insurance.
Businesses are still required to meet the minimum spend requirements in order to achieve full forgiveness of their PPP loans, with a minimum of 60% of loan funds being expended solely for payroll costs.
Non-food service businesses may apply for a “second-draw” loan up to 2.5 times their average monthly payroll costs; food service and accommodation businesses may apply for a loan amount up to 3.5 times their average monthly payroll costs.To qualify, these businesses must have less than 300 employees and must have experienced at least a twenty-five percent (25%) reduction in gross revenues in any quarter of 2020 as compared to the same quarter for 2019.For businesses that did not exist for all or part of 2019, and do not have a 2019 quarter for reference, special rules relative to their eligibility exist.
To qualify, these businesses must have less than 300 employees and must have experienced at least a twenty-five percent (25%) reduction in gross revenues in any quarter of 2020 as compared to the same quarter for 2019.
For businesses that did not exist for all or part of 2019, and do not have a 2019 quarter for reference, special rules relative to their eligibility exist.
All loans issued in connection with this new legislation are capped at $2 million including “second-draw” loans.
The EIDL (Economic Injury Disaster Loan) advance payments of $10,000.00 provided by the Small Business Administration will no longer reduce the total amount of loan forgiveness under the Program.
Employers may select any covered loan period between eight (8) and twenty-four (24) weeks following loan origination.
For employers borrowing $150,000.00 or less, the loan forgiveness process has been simplified requiring a one-page certification with minimal information. For loans in excess of $150,000.00, employers would be required to adhere to the current forgiveness application process, and would remain subject to audit by the Small Business Administration.
Borrowers who returned all or part of their PPP loan may reapply for the maximum amount for which they are eligible so long as the borrower has not yet received loan forgiveness. The Small Business Administration is required to issue guidance to lenders on this issue.
The new legislation overrules previous IRS rulings, which provided that eligible business expenses incurred with PPP loan funds were non-deductible for federal tax purposes. Under the new legislation, PPP borrowers are now permitted to deduct eligible business expenses funded with forgiven PPP loan proceeds.

Employer-paid Student Loan Obligations

Extends an employer’s ability to provide tax-free student loan repayment benefits to its employees up to $5,250.00 per year through December 31, 2025. These benefits are not includable as taxable income to the employee.

Unemployment Insurance

Provides for federal supplemental unemployment benefits in the amount of $300.00 per week until March 14, 2021, in addition to any state unemployment benefit unemployed workers may still be entitled to under those programs.
Extends the Pandemic Unemployment Assistance Program through March 14, 2021, providing for unemployment insurance for out-of-work Americans typically ineligible for unemployment assistance (e.g. self-employed individuals and gig workers).
Extends the Pandemic Emergency Unemployment Compensation program through March 14, 2021, providing for an additional eleven weeks of federal unemployment benefits to unemployed workers who have already exhausted their state unemployment benefits.

Healthcare and Dependent Care FSAs

Permits employers to carry over unused funds from 2020 to 2021 and from 2021 to 2022. There is no maximum dollar limitation associated with these provisions.
Alternatively, employers can utilize a 12-month grace period for 2020 and/or 2021. An employer cannot elect a carry over and grace period for the same FSA.
Employers may also make mid-year plan changes and elections for the 2021 benefit year.

Disclaimer: The material provided herein is for informational purposes only. It is not intended to be construed as legal advice, nor should it be relied on as such. It is always advisable to consult counsel relative to your specific situation.

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Is your DC-FSA administered by Checkwriters? Click here to email us if you would like to amend your plan >>

New Logo

New Colors

New Logo

New Colors

Enhanced Employee Retention Credit (ERC)

Families First Coronavirus Response Act

Payroll Protection Program (PPP)

Employer-paid Student Loan Obligations

Unemployment Insurance

Healthcare and Dependent Care FSAs

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