This year, a new class of legislators are making their mark in federal, state, and local governments, progressing legislation on new and existing issues at all levels. It’s imperative for you to help your business owner clients understand current and pending regulations so they can avoid the costly consequences of falling out of compliance. Some of the top issues to keep on your firm’s and your clients’ radar for 2019 are:
- Sexual harassment prevention. The #MeToo movement resulted in an increase in workplace sexual harassment prevention enforcement and legislation across the country in 2018 and is expected to continue in 2019. The Equal Employment Opportunity Commission reported significantly increased activity around sexual discrimination during the past fiscal year, launching 50 percent more sexual harassment lawsuits than the previous year. State and city legislatures, including California, New York State, Delaware, and New York City, responded with the passage of new legislation and regulations including provisions to implement or expand workplace sexual harassment prevention training requirements.
- Paid sick leave and paid family leave. Currently, more than 40 state and local jurisdictions have implemented paid leave laws and several more are scheduled to implement leave policies in 2019. Although paid sick leave laws are more prevalent, paid family leave laws are generally more onerous for employers. Many family leave laws are funded by employee and/or employer contributions and might also require the periodic reporting of several elements including payroll deductions, employee hours worked, and employee wages.
- IRS Enforcement of Employer Shared Responsibility (ESR). The IRS is continuing its ESR enforcement efforts, sending out 226J letters to employers it believes may not have offered required coverage to full-time employees and their dependent children with the preliminary calculations for ESR payments. Applicable large employers should ensure they complete the returns accurately, as the process of responding to 226J letters and follow-up IRS correspondence is time-consuming and onerous, requiring review of complex data gathered across multiple departments including payroll, human resources, and benefits.
- Form W-4 Changes. Due to the 2017 tax reform law, extensive changes are required to the Form W-4. But due to the complexity of these changes, the release has been pushed back another year and the 2019 W-4 is similar to the current 2018 version. Many state tax agencies are waiting on the IRS to release the federal W-4 to determine if they will modify their withholding processes based on the federal changes.
- Federal support for retirement savings. In August 2018, President Trump issued an executive order directing the Departments of Labor and Treasury to propose regulations that ease the burdens small businesses face in offering retirement savings plans. Prospects for successful new legislation, which will include components of prior proposals, are promising, potentially enhanced by Rep. Richard Neal (D-MA) as Chairman of the House Ways & Means Committee, who intends to make retirement legislation a priority.
- Privacy. As Americans become increasingly focused on how well the companies they deal with protect their sensitive data, many states are enacting or broadening privacy regulations, with California’s new rule effective next year perhaps the most prominent. In addition to the usual requirements for a strong data security process, some states are requiring that consumers have the right to know what data companies are collecting on them and the ability to opt-out of that data being sold or distributed without their consent. Many business groups are calling for a federal privacy regulatory standard to avoid the need for alignment with differing state requirements.
It can be challenging for your small business clients to keep up with the constantly evolving regulatory landscape as they prioritize day-to-day operations and business growth. Armed with a knowledge of regulation and an understanding of the unique needs of your clients’ businesses, you can provide them with the information and resources they need to maintain compliance on all of the top regulatory issues this year.
Mike Trabold is director of compliance risk for Paychex, Inc. Paychex is a leading provider of human capital management solutions for small- to medium-sized businesses.