ROCHESTER, N.Y. — Paychex Inc., which provides software solutions for human resources, payroll, benefits, and insurance services, has released a list of the regulatory issues that employers should monitor in 2023.
The company’s annual list outlines the most prominent compliance-related topics employers will need to contend with this year and explores the legislative and regulatory context surrounding these issues.
Funding and tax credit eligibility rose to the top of the 2023 list, as business leaders manage the economic impacts of inflation and turn to programs like the Employee Retention Tax Credit and the Inflation Reduction Act. Businesses should also prepare for potential legislation and regulations that could impact how to classify workers, pay workers, and provide time off for their workers.
“We understand that keeping up with shifting regulations can be a challenge for business owners—and that missteps can have serious consequences,” says Frank Fiorille, vice president of risk, compliance, and data analytics at Paychex. “The past few years have sparked a widespread re-evaluation of the employee-employer relationship, and that wave of change shows no signs of stopping.”
Paychex’s compliance professionals have identified the following topics as key considerations for employers in 2023:
Despite the absence of any new federal programs to date, businesses can still take advantage of the funding opportunities carrying over from the COVID-19 pandemic, including:
The Employee Retention Tax Credit (ERTC) — Businesses that paid qualified wages to keep employees working from March 12, 2020, through Sept. 30, 2021 (and for some certain businesses identified as Recovery Startups, wages could be paid through Dec. 31, 2021), have until either April 15, 2024 (for three quarters of 2020), or April 15, 2025 (for all four quarters of 2021), to file amended returns and retroactively claim the credit.
Paycheck Protection Program (PPP) — The Small Business Administration is still accepting applications for Paycheck Protection Program (PPP) loan forgiveness if submitted before the maturity date of the loan.
The Inflation Reduction Act — This doubled the maximum amount of the Research and Development Tax Credit, giving certain businesses in tax year 2023 a chance to claim up to $500,000 annually for qualified research activities.
State Incentives — Some states also continue to sponsor programs that enhance funding efforts to help businesses, including 38 approved State Small Business Credit Initiative programs.
This issue was again on the agendas of state and local legislative bodies in 2022, and more jurisdictions are expected to pass legislation this year. By the close of 2022, seven states and several local jurisdictions had passed legislation requiring employer pay transparency. Employers will also need to stay on top of federal and state initiatives that may pass in 2023 to address pay inequity through annual reporting similar to the existing California Pay Data reporting and the Illinois Equal Pay reporting intended to mitigate race and gender discrimination in pay.
WORKER CLASSIFICATION GUIDANCE
Late last year, the U.S. Department of Labor (DOL) released a proposal to revise its guidance on determining who is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). While the DOL is expected to release a final rule in 2023, the rule will only be applicable when determining worker status under federal wage and hour law. Employers must continue to be diligent in maintaining awareness of, and compliance with, the other complex tests for determining worker status under the many other federal, state, local, and industry-specific regulations and laws.
Check back Monday for the conclusion!
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