On Oct. 11, 2022, the U.S. Department of Labor (DOL) announced its rule proposal for classifying independent contractors. The proposed rule would implement a test that the DOL will use to determine whether workers are employees or independent contractors under the Fair Labor Standards Act (FLSA). The proposed rule would formally rescind the current standard created by the Trump administration and would assist with employee classification. This is the Biden administration’s second attempt to reverse the current standard, which it believes leaves workers vulnerable to misclassification.
The DOL’s current rule employs factors that must be considered when classifying workers. These factors are known as the economic realities test. Two of the factors—the nature and degree of control over the work and the worker’s opportunity for profit or loss—are considered “core factors,” having more probative value and carrying greater weight than the other factors. To answer the ultimate question of whether a worker is economically dependent on their employer, the proposed rule would return the test to a multifactor totality-of-the-circumstances analysis. This means no factor would have a predetermined weight.
According to the DOL, the proposed rule aligns the department’s analysis for determining worker classification with current judicial precedent and the FLSA’s text and purpose. When determining a worker’s status, the proposed rule would have the following factors weighed equally:
Workers determined to be economically dependent on an employer would most likely be considered employees. Employees are entitled to certain benefits and protections that employers are not required to provide independent contractors, such as minimum wage, overtime, workers’ compensation, and unemployment benefits
The proposed rule applies only to laws the DOL enforces, such as the FLSA. Other federal agencies, like the IRS, and states can set their own criteria for determining worker classification. However, many employers, regulators and judges will likely consider the DOL’s rule when making decisions regarding worker classification. This proposed rule is generally considered worker-friendly and, as such, may greatly impact gig companies and related service providers, which classify the majority of their workers are independent contractors.
The DOL will formally publish the proposed rule in the Federal Register on Oct. 13, 2022; 45 days are provided for public comment. Subsequently, the department will review comments and determine whether to move forward with a final rule.
Even after the DOL completes the notice and comment period, it will likely be some time before this proposed rule becomes final, as the department’s rule is likely to be legally challenged—similar to the administration’s prior efforts. Employers are not obligated to change how they classify employees until the DOL’s proposed rule becomes final. However, employers who may potentially be impacted will want to follow the DOL’s rule-making process closely.
As 2022’s Election Day approaches on Tuesday, Nov. 8, employers may be curious about how to best prepare. While federal law does not require employers to provide their employees time off to vote, many states have voting leave laws that allow employees to take time off to vote in certain circumstances. Further, employees may desire their employers to offer leave regardless of the applicable laws, so employers may choose to proactively plan for how to handle Election Day. This article covers general information about state voting leave laws and employer considerations surrounding employee leave or time off for voting.
Most states and localities have laws requiring employers to provide employees time off work to vote, even though no federal law requires this. Yet, if certain employees have enough time to vote during nonworking hours, they may not be eligible for leave.
In addition, some states even have notice requirements where employers must post a notice regarding voting leave laws. Employers should be aware of the voting leave laws that apply to them and be prepared to comply with any applicable requirements.
There are several ways employers can go about employee voting leave. One strategy is to provide time off to vote during Election Day. Even if this is not required in their state, employers may provide paid time off. Some employees may be seeking employers who offer time off or other flexibilities regardless of their state’s requirements and may seek employment somewhere that does.
Alternatively, employers can consider making Election Day a company holiday, if feasible, so everyone has the day off and can vote when they please. Employers may also consider providing their employees with information about early and absentee voting so that some employees may vote ahead of time and not need to take off work on Election Day. Employers should assess the various options and consider what works best for their organization and employees.
Even though federal law does not require employers to provide leave to vote, many state laws do. As Election Day approaches, employers should review applicable laws and prepare to accommodate employees accordingly. If an organization has any specific compliance concerns surrounding employment law, it should seek local legal counsel. For additional information on voting, check out these federal resources: Voting and Elections in the United States and the U.S. Election Assistance Commission.
The Internal Revenue Service (IRS) has released Notice 2022-55, containing cost-of-living adjustments for 2023 that affect amounts employees can contribute to 401(k) plans and individual retirement accounts (IRAs).
The employee contribution limit for 401(k) plans in 2023 has increased to $22,500, up from $20,500 for 2022. Other key limit increases include the following:
The income ranges for determining eligibility to make deductible contributions to traditional IRAs, contribute to Roth IRAs and claim the Saver’s Credit (also known as the Retirement Savings Contributions Credit) also increased for 2023. The IRS’ news release contains more details.
Additional details on these and other retirement-related cost-of-living adjustments for 2023 are in IRS Notice 2022-55.
IRS Updates Annual Benefit Maximums for Flexible Spending Accounts and More Each year in the fall, the IRS announces new limits for several types of benefits that have maximums subject to annual indexing. You can find the full list of the recently released amounts for 2023 in IRS Revenue Procedure 2022-38, but we’ve outlined the most common items employers ask us about.
For plan years beginning in 2023, the salary reduction contribution limit is $3,050. For health FSAs that include a carryover feature, the maximum carryover is $610.
For 2023, the monthly limits are increased to $300 for both qualified parking and mass Transit.
For 2023, QSEHRAs may not reimburse more than $5,850 per year for single coverage and $11,800 for family coverage.
For 2023, the maximum tax credit and employer-provided adoption assistance that can be excluded from wages is increased to $15,960. Individuals with a modified adjusted gross income above $239,230 may not take the full exclusion amount.
The current Form I-9, Employment Eligibility Verification, will technically expire on October
31, 2022, as noted on the form itself. However, the U.S. Citizenship and Immigration Services (USCIS) says employers should continue using the current Form I-9 after its expiration date (because a new form hasn’t been released yet). We’ll provide an update when the new version is available.
The Department of Homeland Security (DHS) has once again extended the policy that provides employers with flexibility related to in-person Form I-9 document inspection. This latest extension is in effect until July 31, 2023.
You can read the extension announcement here.
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1/31 – Form 940 Filing Deadline (2022)
1/31 – Form 941 Filing Deadline (Q4)
1/31 – Forms W2 and 1099-Misc Distribution Deadline
1/31 – Forms W2 and W3 Filing Deadline
Lighthouse HR Support (LHRS) provides practical human resource information and guidance based upon our knowledge and experience in the industry and with our clients. LHRS services are not intended to be a substitute for legal advice. LHRS services are designed to provide general information to human resources and/or business professionals regarding human resource concerns commonly encountered. Given the changing nature of federal, state and local legislation and the changing nature of court decisions, LHRS cannot and will not guarantee that the information is completely current or accurate. LHRS services do not include or constitute legal, business, international, regulatory, insurance, tax or financial advice. Use of our services, whether by phone, email or in person shall indicate your acceptance of this knowledge.