As 2019 winds down there are a number of things that you need to be aware of going in to 2020 to ensure compliance with federal and state wage and hour rules and other payroll related laws.
- New Minimum Salary Threshold for Exempt Employees – beginning January 1st, employees must be paid at least $684 per week (increased from $455 per week) in order to maintain their exempt status. For more information about this change, you can read our previous blog post here: New DOL Ruling Increases the Salary Threshold for Exempt Employees
- The maximum wage subject to Social Security tax (both employee and employer paid) will increase to $137,700 (was $132,900 in 2019).
- The IRS has increased the annual 401k Contribution limit to $19,500 (in 2019 the limit was $19,000). Individuals over 50 years old can contribute an additional $6,500 per year for a total of $26,000 per year.
- The maximum amount that can be put into a Health Spending Account (HSA) will increase by $50 for individual coverage to $3,550 AND $100 for family coverage to $7,100 per year. Employees over 55 years old can contribute an additional $1,000 per year into their HSA.
- There are many states increasing their minimum wage beginning on January 1st. Check with your state’s labor department for details as to whether your state is changing.
- A newly revamped form W-4 must be completed by all employees hired after January 1, 2020 or any employee who want to make a change to their federal withholding after January 1st. You can read more about this in our previous blog post here: IRS Releases Revamped 2020 W-4 Form
One final note to be aware of: With 2020 being a leap year, there will be 53 Fridays in the year. This may mean an additional payroll for your company depending on your payroll frequency and schedule. This should be taken into consideration when determining payroll amounts, deduction amounts for the year, etc.
This blog post is for information purposes only and is not meant to be interpreted as legal advice. Please consult your account or attorney as appropriate when making decisions for your company.