TCJA impacts to active legislation
April 16, 2018
By Tracey Lueken-Burds, CPP, Partner
Explore the impact of the Tax Cuts and Jobs Act (TCJA) on legislation and legislative entities.
- You must be a business qualified for FMLA.
- Your employee has to work for you for at least one year and make less than $72,000. (No double-dipping with corporate salary deductions).
- Ex: you are paying an employee 100 percent of wages for maternity leave outside of your normal paid time off (PTO) policy (traditional PTO, sick leave, etc.) for at least 2 weeks. You can claim a credit of up to 25 percent of those wages.
- OR, you are paying an employee 50 percent of wages for maternity leave outside your normal PTO for at least 2 weeks. You can claim a credit of up to 12.5 percent of wages.
The TCJA allowed for an additional Family Medical Leave Act (FMLA) credit for businesses which can be taken for wages paid to employees for FMLA for tax years 2018 and 2019 only. Here’s how it works:
As long paying your employee for at least 2 weeks, at least 50 percent of wages, a business tax credit is available to you. Anything less than 50 percent and/or shorter than 2 weeks does not qualify. Regular PTO does not qualify; it must be over and above your standard PTO policy. The credit expires at the end of 2019.
The Work Opportunity Tax Credit (WOTC) program was upheld in the TCJA. WOTC is a tax credit to employers for up to $9,600 per new hire for hiring from designated target groups and has proven to cost the government less than the cost of administering government assistance programs. Currently, it is extended through 2019, but permanency has been proposed. Look for an update on that as the year progresses.
While the Affordable Care Act (ACA) garnered a lot of attention last year, only a couple of components were changed through the TCJA. The first affecting employers was that the Cadillac tax, which is an excise tax on higher-cost plans offered by employers, was repealed through 2022. Additionally, the individual mandate was repealed beginning with the 2019 tax year. For individuals, it is important to recognize that the individual mandate is still in effect for tax years 2017 and 2018. Beyond the Cadillac tax and individual mandates, nothing has changed for employers. Coverage is still required for employers with more than 50 full-time employees who work at least 30 hours per week, and all forms and paperwork are still mandatory.
Nothing has changed with the Fair Labor Standards Act (FLSA) since it was put on hold in August of 2017. Discussions still circulate on increasing the salary threshold, but nothing has been released at this time. Employers should be aware that the duties test still applies and accurate job descriptions are still required in order to pass a potential Department of Labor (DOL) audit.
As a reminder, for those who do not pass an exemption test and are eligible for overtime, there is an opportunity for blended or weighted overtime for employees who perform work over two different rates of pay. Employers can either always pay the overtime at the higher rate of pay or do a weighted average calculation. Non-discretionary bonuses are subject to the blended rate as well.