USA Labor Law Updates

Several measures for COVID-19 business credits and other USA labor law updates are being implemented state-wide across the United States.

The IRS (Internal Revenue Service) has proposed several new employer credits to assist business owners during COVID 19. These credits include:

• Employee Retention Credit (helps businesses including tax-exempt organizations retain the employees on the payroll regardless of its size). The two entities that are exempt are state and local governments and their sub-agencies, and small businesses with small business loans.

The refundable tax credit is 50% up to USD 10,000 in paid wages. The qualifications to receive the credit are:

• The business is at least partially suspended as a result of COVID-19.
• The company’s gross receipts do not exceed 49% for the respective quarter for 2019.

Employers must calculate these measures on a quarterly basis. The credits and their implications are as follows:

• Paid Sick Leave and Family Leave Credit:
• Sick Leave Credit – Paid Sick Leave Credit is granted to employers for employees who are not able to work because they are quarantining, or if they are receiving medical attention for COVID-19 symptoms. This includes telework employees. Employees can accrue paid sick leave for a maximum of 10 days, and up to 80 hours at the regular rate of pay. This cannot exceed USD 511 per day and USD 5,110 in total.
• Caregiver or Child’s Care Credit – Credits are also granted to employers to compensate for employees who are unable to work because they are caring for someone infected with the Corona Virus, or caring for a child placed on home-school COVID-19 measures. Paid sick leave for a maximum of two weeks/up to 80 hours is available for employees. The pay rate for this will be at 2/3 of their regular rate, or up to USD 200 per day and not exceeding USD 2,000 in total.
• Family Leave Credit – Employees can receive 2/3 of their regular pay in family and medical leave, at a maximum of USD 200 per day and USD 10,000 in total. Qualifying leave of 10 weeks or less can be applied toward the Family Leave Credit.

Employers can immediately receive their reimbursements by reducing their deposits of payroll taxes taken from employees’ wages by the credit amount. All eligible employers are permitted immediate receipt of the full credit amount since April 1, 2020, to December 31, 2020.

Employer Considerations:

The new credits introduced by the IRS can be instrumental in helping businesses stay afloat during these unprecedented times. Employers should allocate time to finding out if they are eligible to receive these credits.

Beginning January 1, 2021, The hourly minimum wage in California will be raised as per the below:

• For employers with 25 employees or less – USD 13 from USD 12.
• For employers with 26 or more employees  – USD 14 from USD 13.

In 2018, the schedule of year-wise minimum hourly wages was released. The schedule set the minimum wages for the period ranging from 2018 to 2023 with a maximum of USD 15 hourly for most employees.

The schedule of minimum wages is as follows:

• For the year 2021: USD 13.50 per hour
• For the year 2022: USD 14.25 per hour
• For the year 2023: USD 15.00 per hour

Beginning January 1, 2021, the minimum wage for New Jersey employees will rise from USD 11 to USD 12. The minimum wage for employees working for small businesses and for seasonal employees will increase to USD 11.10 from USD 10.30 per hour.

New Jersey has also introduced a new Bill that with a 2.5% Corporate Surtax. The corporate surtax rate of 2.5% will be implemented for corporations whose net taxable income exceeds USD 1 million for tax periods beginning on or past January 1, 2018, up to December 31, 2023.

These amendments to ESSTA are to be effective from September 30, 2020.

New law amendments to the New York City Earned Safe and Sick Time Act (ESSTA) were signed on September 28, 2020 by Mayor Bill de Blasio, and will go into place from September 30, 2020. ESSTA amendments are:

• Employees can now accrue safe and/or sick time under ESTA as follows:
• Employers with under four employees and a net income below USD 1 million in the prior tax year = 40 hours of unpaid sick time annually
• Employers with less than four employees and a net income of more than USD 1 million in the priortax year = 40 hours of paid safe/sick time per calendar year
• employers with at least one domestic worker; and with a total of more than five and less than 99 employees.

• 56 paid hours of safe/sick time per calendar year in case for employers with at least 100 employees

Implication:
Employers must revise and update their policies and practices accordingly with the above amendments to the law, as ESSTA has gone into effect from September 30, 2020,

Juneteenth (June 19), will be classified as an Official Public Holiday in New York State from 2021.Juneteenth (June 19), a day that signifies liberation and celebrates Black/African American achievements will now be recognized as a public holiday in the state of New York. The legislation has been signed, and the executive order by Governor Andrew M. Cuomo is now being issued to declare June 19^th, as an Official Public Holiday. Employers in the state of New York will need to update workplace policies and documents to reflect this new holiday.

After December 31, 2020, Long Island & Westchester minimum wages will be raised from USD 13 to USD 14 hourly and the remainder of New York State minimum wages will be raised from USD 11.80  to USD 12.50 hourly.

The information shared in this article provides general information only, and not professional advice. If you need to consult on international expansion of your business or have specific questions about local policy compliance, contact us today to speak to one of our experts.