Transportation Benefits: The Road is Starting to be More Traveled

It looks like we have a new movement afoot, shall I say.  Although under the 2013 U.S. Bureau of Labor Statistics National Compensation Survey  less than six percent of private sector employees have access to subsidized commuting that is available under the Internal Revenue Code.  But this may be changing. Cities are starting to mandate transit benefits to help out employees in that city. The latest is New York City whose Mayor Bill de Blasio signed into law a requirement that employers with 20 or more employees give their full-time New York City employees an option to purchase their transit benefits with pre-tax dollars.  The law was signed on October 20th and is effective January 1, 2016. It does not apply to parking benefits and there are civil penalties.  New York is the third city to enact such legislation. Washington D.C.’s mandate will take effect also in January 2016.  But the first city to do so was, of course, San Francisco, CA.  That ordinance was passed and effective in 2009.  All these cities impose the mandate on employers with 20 or more employees. The purpose of these mandates is to give the employees tax breaks on commuting already worked into the Internal Revenue Code but not readily available unless an employer offers it to them.  For example, according to the organization Riders Alliance if an employee uses the current pre-tax level of $130 per month, the New York City employee could save an average of $443 in taxes each year by buying the Metrocard (cost is $112) through an employer.  If you calculate the benefit out across the board any employee who buys the transit passes through their employer and uses the full $130 could save $514 per year in taxes.  And it doesn’t cost the employer anything either. In fact it could save them money according to Riders Alliance since offering the benefit could save the employer $103 per employee per year using the same $112 Metrocard.

And it may not be just cities who are imposing these mandates.  Air Quality Management Boards are also looking into this type of mandate to reduce traffic and improve air quality.   The first one so far is the San Francisco Bay Area Air Quality Management District.  San Francisco Bay Area employers with 50 or more full-time employees within their district’s geographical boundaries are required to register and offer pre-tax commuter benefits to their employees.  This became effective last month (September 30, 2014).

So be prepared and keep your eyes open as more cities and other entities look at this type of program.  Unfortunately, although the tax law that permits these types of savings is on the federal level, the mandates never comes on the federal level. Unlike other countries who mandate these types of national benefits on the national level the U.S. does not.  The result is that employers will have to work through hodgepodges of separate entities with separate requirements.  Information on each of the mandates is provided below.

New York City

San Francisco (City)

San Francisco Bay Area

Washington D.C

Weekly SUI Catch Up

As promised when I have the room in a blog week I will try to catch up on all the SUI wage bases and rates announcements or other SUI related news that comes across my desk since the previous update has been posted.  So here is what has come in since my last update:

Alaska: The state has announced that the SUI rates will be reduced in 2015 due to a stronger economy and legislation passed in 2013.  The actual rates and the wage base will not be released until December.

Arkansas:  According to my sources Arkansas has repaid its remaining federal unemployment insurance loan balance as of October 1 and will not be borrowing again this year.  That means that employers in Arkansas will see the return of the minimum net FUTA tax rate of 0.6%.

Delaware:  My sources are telling me that the SUI taxable wage base will remain $18,500 for 2015.  The tax schedule will also remain the same with the rates ranging from 0.3% to 8.2%. The special training tax assessment will also continue to be .085% for 2015. The SUI tax rate notices will go out to employers in mid-December.

Missouri:  The SUI taxable wage base will remain $13,000 for 2015.

New Hampshire:  The Governor’s office has announced that a “fund balance reduction” will go into effect for the fourth quarter of 2014.  The result should be a 0.5% reduction in their SUI rates beginning October 1st.

Rhode Island:  The state is announcing that their outstanding federal loan will be repaid before the November 10th deadline.  This will allow the net FUTA tax rate to return to 0.6% for calendar year 2014.

Wisconsin:  rates for 2015 will continue to be based on the Rate Schedule A but will range from 0.27% to 12% for small employers and 0.70% to 12% for large employers.

We should have another update for you next week covering all that comes in after today.

 

 

Independent Contractor vs Employee–Another Round

In the never ending battle between classifying an worker as an independent contractor or as an employee, the state of Alabama has weighed into the ring.  Officials of the U.S.  Department of Labor’s Wage and Hour Division and the Alabama Department of Labor have signed a memorandum of understanding (MOU) to protect the rights of employees by preventing their misclassification as something other than an employee–such as an independent contractor.  This MOU represents a new effort on the part of the agencies to work together to protect not only the workers’ rights but those of the employers who follow the regulations but may be undermined economically by employers who do not. This MOU is only the latest in a long string of 15 MOUs between the states and the DOL with the goal of preventing, detecting and remedying employee misclassification.  States that have signed an MOU with the DOL include California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington.  For more information check out the Wage and Hour Division’s webpage on Employee Misclassification as Independent Contractors.

Even the USCIS Has Widgets and Webinars!

It appears everybody is getting into the widget and webinars craze even the USCIS! The U.S. Citizenship and Immigration Services has released two new tools for employers.  The Department has released a downloadable Form I-9 Desktop Widget that allows employers to automatically launch the Form I-9 from their desktop at any time.   The Form I-9 Desktop Widget benefits include:

  • Quick access to the current version of the Form I-9
  • Quick access to learn about E-Verify
  • Quick Access to Form I-9 and E-Verify free webinars schedule

The widget is available on the USCIS website.

The Department is also offering it’s first Form I-9 Webinar on Demand.  Now you can watch the free Form I-9 webinar at any time. Choose the chapters of your choice or watch the entire 22 minute video in one sitting.  You will see how to complete Sections 1, 2 and 3, best practices and much more.  It is a great training tool.

The video is available on the USCIS website

Correction to Min Wage for CT

In our post on Friday we listed the new 2015 minimum wage for CT to be $9.00 per hour.  That was a error and we apologize!  We did not list the later legislation which raised the rate instead to $9.15 per hour effective January 1, 2015.  Thanks to our reader who caught our error. We strive to be as accurate as we can but even the best of us can make the “boo-boo” from time to time.

Minimum Wage Is on the Move!

The minimum wage, whether federal or state, is one of those items that is basic to payroll.  Right now it is really on the move and heading upwards! Some of the upward mobility is due to previous legislation kicking in for 2015 while others are leaving it up to the voters in the November elections.  A few of the increases due to previous legislation include Montana going to $8.05 per hour and Connecticut increasing to $9.00 per hour. Both are effective January 1.  New York will increase to $8.75 on December 31, 2014.

Just a reminder at least 11 states tie their minimum wage to the consumer price index including Arizona, Colorado, New Jersey Ohio and Washington.  These states will be announcing their rates for 2015 sometime in October or November.

Still other states are putting the matter to the voters on whether or not to increase the minimum wage.  States voting this November 4th to increase the minimum wage include Alaska, Arkansas, Illinois, Nebraska, and South Dakota.

Payroll is becoming political and payroll professionals need to watch elections closely to ensure compliance.

 

SUI 2015 Wage Base/Rates Updates

As I promised, I will be providing the 2015 state unemployment insurance (SUI) updates as I get them each week.  I am going to try to do it at least once or twice a week as year end gets closer.  So for this time around we have the following to report:

Colorado:  The wage base will increase to $11,800.  This is up from $11,700.  but the rates are expected to range from 0.78% to 10.20% which is actually down a bit from 2014.  The rate schedule will be finalized later this month and the tax rate notices will be mailed to employers in November.

Minnesota:  The taxable wage base will be $30,000 for 2015.  This is up $1,000 from the 2014 base of $29,000.

 

TN to Have Income Tax?

There are nine states in the country that do not have or require state income tax to be withheld.  One of those is Tennessee.  Although the state’s constitution does not forbid or preclude the state’s legislature from implementing a state income tax it has not done so. However,  the voters of Tennessee are poised to vote on the issue.  On the November 4th ballot is Amendment 3.  Voters will be able to lower the risk of a new personal income tax or payroll tax by voting “yes” to the amendment. The amendment would prohibit lawmakers through a constitutional amendment, from levying, authorizing or permitting any state or local tax on payroll or earned personal income.  Whether to pass the amendment or not is up to the voters of Tennessee and I would never get involved on either side.  But it is one election payroll needs to watch.