Important Changes Effective in 2014
While certainly not a complete list, here are several important changes to payroll/HR rules and regulations that may affect your business in 2014. And, many of them need to be paid attention to prior to your first payroll of January.
HEALTH COVERAGE COST INFORMATION REQUIRED ON W-2s
Employers that issued 250 or more W-2 forms in 2012 must report the cost of employer-sponsored health coverage for 2013 on the 2013 W-2 forms.
MINIMUM WAGE INCREASES IN SF, SAN JOSE, AND CALIFORNIA
January 1st will bring increases in the minimum wage in San Francisco and San Jose-two of the Bay Area’s largest cities. Meanwhile, California’s minimum wage will also increase later in 2014.
- San Francisco’s minimum wage is going up from $10.55 to $10.74 an hour
- In San Jose the rate is increasing from $10 to $10.15 an hour
- On September 25th, Gov. Brown signed into law AB10 which will increase the state’s minimum wage to $9 on 7/1/2014 and to $10 on 1/1/2016.
NEW CALIFORNIA MINIMUM WAGE AND MINIMUM EXEMPT SALARIES FOR 2014
-Minimum wage: $9.00 per hour
-Overtime: $13.50 per hour
-Inside salespeople: Regular rate of pay must exceed 1.5x minimum wage
- Also more than ½ of compensation must be commissions
-Salary basis test: $720 per week ($37,440 annually)
- Don’t forget, employees must also meet the “duties” test to qualify as exempt
CALIFORNIA RELEASES OVERTIME EXEMPTIONS
The State of California Department of Industrial Relations (DIR) has released the overtime exemptions for licensed physicians and surgeons and for computer software employees. Click the following links to the memorandums:
NEW MILEGAGE RATES ANNOUNCED
The IRS just announced its standard mileage rates for 2014. The new rates will be a slight decrease – a half cent – from the 2013 rates for business, medical and moving expenses.
Effective January 1, 2014, the standard mileage rates for the use of a vehicle such as a car, van, SUV or pickup will be:
- 56 cents per mile for business miles driven
- 23.5 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
NEW IRS RULE – TIP VS. SERVICE CHARGE
Do Your Employees Understand the Difference?
On January 1, 2014, the IRS’s new definition of “service charge” takes effect. A service charge, unlike a tip, is a mandatory gratuity added to a bill by the restaurant for large groups or other special circumstances (curb-side delivery, etc.). Unlike tips, service charges are considered wages; accordingly, service charges must be included in the calculation of hourly employees’ regular rate of pay (affecting overtime calculations).
FSA RULES MODIFIED
The IRS recently issued guidance modifying the “use it or lose it” rule, which has long been the most unpopular feature of health flexible spending accounts (health FSAs) commonly offered under a Section 125 cafeteria plan. For complete details, click the following link: