Welcome to our Summer 2023 edition of Pay Matters – our roundup of all the payroll and compliance news that you must know.
Read on to stay informed and in compliance with relevant alerts and insights that matter most for your payroll.
The current flexibility for employers to remotely inspect Form I-9 documents for onboarding new hires will be coming to an end.
In March 2020, in response to the COVID-19 pandemic, U.S. Immigration and Customs Enforcement (ICE) allowed for the temporary deferral of the requirement for employers to review Form I-9 Section 2 identity and employment authorization documents in an employee’s physical presence. Since then, employers have been able to use this flexibility and inspect required documents remotely. However, as of July 31, 2023, remote inspection will no longer be allowed. In addition, employers must go back and perform in-person document examinations by August 30, 2023, for employees whose documents were inspected remotely.
In-person inspection of previous hires’ documents will be a large undertaking for some employers who may have hired hundreds or thousands of employees using remote inspection, especially since many employees live and work remotely. Immigration law allows employers to use designated representatives to complete Section 2 of Form I-9. That representative can be someone living in the remote worker’s city and not associated with the employer, such as the employee’s adult family member or friend. However, it cannot be the employee themself.
When an employer examines the documentation in-person that was previously examined remotely, they must add “documents physically examined” and the date of examination in the “Additional Information” box in Section 2, or in Section 3, as appropriate. If an employer representative who did not do the remote inspection completes the new, physical inspection, a new Form I-9 Section 2 should be completed and attached to the old Form I-9.
For more information, click here.
As health care costs continue to rise, the IRS has announced a significant increase for 2024 HSA contributions limits for those covered under High-Deductible Health Plans (HDHPs), giving employers time to plan for the coming year.
The updated contributions and out-of-pocket limits are as follows:
|Contribution and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans|
|HSA contribution limit
(employer and employee)
|HSA catch-up contributions
(age 55 or older)
|HDHP minimum deductibles||Self-only: $1,600
|HDHP maximum out-of-pocket amounts
(co-payments, deductibles, etc., but not premiums)
On May 3, New York Governor Kathy Hochul signed into law the 2023-2024 budget. Included in the budget are sweeping changes to minimum wage, home health care worker wage parity, and the MCTMT tax.
Under the latest budget changes, minimum wage is scheduled to increase as follows:
|Date||New York City, Nassau, Suffolk, and Westchester Counties||Remainder of state|
|January 1, 2024||$16.00||$15.00|
|January 1, 2025||$16.50||$15.50|
|January 1, 2026||$17.00||$16.00|
HHA Minimum Wage
HHA workers will receive their own minimum wage increases as follows:
|NYC (all 5 boroughs)||$17.00||$18.55||$19.10||$19.65|
|Nassau, Suffolk, Westchester||$17.00||$18.55||$19.10||$19.65|
|All other regions||$16.20||$17.55||$18.10||$18.65|
With the increase in base minimum wage, the benefit portion of wage parity is decreasing as follows:
|Region||Current||1/1/2024 and forward|
|NYC (all 5 boroughs)||$4.09||$2.54|
|Nassau, Suffolk, Westchester||$3.22||$1.67|
Metropolitan Commuter Transportation Mobility Tax
The “MTA tax” rate for the highest wage bracket with increase effective July 1, 2023, for employer doing business in New York City only.
Currently, employers in the Metropolitan Commuter Tax District paying over $437,500 in a quarter are assessed at an MCTMT tax rate of 0.34%. Effective July 1, 2023, employers in this wage bracket who engage in business in the five boroughs of New York City will have an increased tax rate of 0.60%.
For more details on the NY budget and its effect, check out our webinars New York’s New Budget: What It Means to You and New York’s New Budget: What It Means to Your Home Health Care Agency.
On June 12, 2023, NYC adopted a new rule effective July 12 raising app-based food delivery workers paid minimum wage to $17.96 per hour (not including tips). The new minimum wage will apply to workers with a pickup or delivery location in NYC.
Minimum wage for app-based food delivery workers is scheduled to rise to $18.96 on April 1, 2024, and to $19.96 on April 1, 2025.
Under bill HF 2, Minnesota becomes the latest state to create a state-wide paid family and medical leave program.
Effective January 1, 2026, nearly all Minnesota employers must begin withholding employee contributions and making employer contributions to the program. Effective for 2026, the total premium rate will be 0.7% of taxable wages, consisting of 0.4% for the medical leave portion and 0.3% for the family leave portion. Employers will be required to pay at least 50% of the premium, and they can withhold the remaining 50% from their employees.
Benefit payouts will also begin January 1, 2026, and will be available to eligible employees to bond with a new child, to address serious health conditions and pregnancies, for safety leave, and for family members’ military deployment. The number of weeks for which an employee can claim benefits under PFML is capped at 20 annually.
For more information, click here.
On May 24, Minnesota Governor Tim Walz signed into law a statewide earned paid sick and safe leave law (ESSL).
Effective January 1, 2024, all employees accrue up to 48 hours of ESSL annually. Paid sick and safe leave is accrued at 1 hour for every 30 hours worked.
Unused hours may be carried over by employees, but employers can cap accruals at 80 hours.
Reasons eligible employees may take ESSL include:
Employees must be given notice of their rights regarding ESSL by January 1, 2024, or when employment commences, whichever is later. If an employer has an employee handbook, an ESSL notice must be included.
Employee wage statements (pay stubs) must include the total number of earned sick and safe time hours accrued and available for use as well as the total number of earned sick and safe time hours used.
In addition, it is important to be aware the several localities in Minnesota already have local earned sick and safe leave ordinances. Employers must follow whichever law provides their employees with more benefits and protections.
Minnesota employers should take the time to review existing paid sick leave or PTO policies to ensure compliance with these new requirements.
For more information, click here.
On May 3, Maryland Governor Wes Moore signed bills to delay the start of Maryland Paid Family and Medical Leave program. Contributions to the program are postponed from October 1, 2023, to October 1, 2024. In addition, the start of benefit payouts is delayed from January 1, 2025, to January 1, 2026.
Amendments to the PFML law also cap program contributions at 1.2% of an employee’s wages up to the Social Security wage base and expands the definition of “family member” to include domestic partners.
For more information, click here.
Effective July 1, 2023, under SB 1718, Florida employers with 25 or more employees must use E-Verify.
E-Verify is the federal system that enables employers to confirm employees’ employment eligibility based on their Forms I-9 and checks for mismatches of names and Social Security numbers. Though voluntary under federal law, Florida employers will now have to enroll and verify their employees’ eligibility using the E-Verify online system. Employers must also certify on their first tax return for each calendar year that they are following this requirement.
Employers who fail to use E-Verify when needed at least 3 times in a 24-month period will be fined $1,000 per day and face license suspension.
The requirement will remain in effect until the federal government requires all employers to use E-Verify. Florida now joins the following states which mandate, or partially mandate, use of the system: Alabama, Arizona, Georgia, Massachusetts, Mississippi, North Carolina, South Carolina, Tennessee, and Utah.
District of Columbia: Effective July 1, 2023, minimum wage will increase from $16.10 per hour to $17.00 per hour.
Nevada: Effective July 1, 2023, minimum wage will increase from $10.50 per hour to $11.25 per hour.
Oregon: Effective July 1, 2023, minimum wage will increase from $13.50 per hour to $14.20 per hour.
Alameda, CA: Effective July 1, 2023, minimum wage will increase from $15.75 per hour to $16.52 per hour.
Berkeley, CA: Effective July 1, 2023, minimum wage will increase from $16.99 per hour to $18.07 per hour.
Emeryville, CA: Effective July 1, 2023, minimum wage will increase from $17.68 per hour to $18.67 per hour.
Fremont, CA: Effective July 1, 2023, minimum wage will increase from $16.00 per hour to $16.80 per hour.
Los Angeles, CA: Effective July 1, 2023, minimum wage will increase from $16.04 per hour to $16.78 per hour.
Los Angeles County, CA: Effective July 1, 2023, minimum wage will increase from $15.96 per hour to $16.90 per hour.
Malibu, CA: Effective July 1, 2023, minimum wage will increase from $15.96 per hour to $16.90 per hour.
Milpitas, CA: Effective July 1, 2023, minimum wage will increase from $16.40 per hour to $17.20 per hour.
Pasadena, CA: Effective July 1, 2023, minimum wage will increase from $16.11 per hour to $16.93 per hour.
San Francisco, CA: Effective July 1, 2023, minimum wage will increase from $16.99 per hour to $18.07 per hour.
Santa Monica, CA: Effective July 1, 2023, minimum wage will increase from $15.96 per hour to $16.90 per hour.
West Hollywood, CA: Effective July 1, 2023, minimum wage will increase from $17.50 per hour to $19.08 per hour.
Montgomery County, MD: Effective July 1, 2023, minimum wage will increase from $15.65 per hour to $16.70 per hour.
Cook County, IL: Effective July 1, 2023, minimum wage will increase from $13.35 per hour to $13.70 per hour.
Tukwila, WA: Effective July 1, 2023, minimum wage will increase to $16.99 per hour for employers with 15 to 500 employees and $18.99 per hour for employers with over 500 employees.
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