Business owners are well aware that with the new year come business regulation changes and laws that affect both big and small businesses. While many business owners are busy managing various aspects of their business, it’s easy to let the changes slip by or miss the changes entirely. Fortunately for Texas businesses, because 2016 was a year that the Texas Legislature was not in session, there were not many state-based changes. Most of the changes facing Texas businesses stem for recent federal business regulations, some of which are currently enjoined, others of which are in effect, but face a dubious future given the Presidential election. To ensure your business remains compliant with some of the major regulatory changes for this year, take a peek below.
The Overtime Law
Probably the biggest headache facing most business were the changes made to the federal overtime provisions of the Fair Labor Standards Act (FLSA). As many business owners know, the changes began by increasing the minimum salary threshold necessary for employees that fall under an exempt category to truly be exempt from the overtime provisions. While many businesses were bracing for the change, a U.S. District Court Judge in Texas slammed the brakes on those changes occurring, at least for now, and issued an injunction.
To further muddy the waters of these new business regulations, the change in administrations at the federal level could, and I emphasize could, ring a death knell for these new regulations. With that said, it is always best to ensure that systems are in place to ensure adequate tracking of time and duties for those employees that you categorize as exempt. This will help ensure that any changes, whether the regulations are upheld on appeal and allowed to become effective, are subject to change by the new administration, or die a slow death in the court system, do not catch you unaware down the road.
Paid Sick Leave
While some states look at enacting mandatory paid sick leave, or other forms of mandatory paid leave, Texas is not joining that group, yet. However, that does not mean that Texas businesses are free and clear on this issue. Those Texas companies that contract with the Federal Government are now required to provide their employees with up to seven days of paid sick leave annually.
An employee is able to use this paid sick leave for family care and absences resulting from various reasons, including domestic violence. Whether employees accrue this paid leave immediately or over time, is up to the employer. If you do not have a policy in place to address this new regulation, you need to adopt one NOW. By not having such a policy in place, you run the risk of finding yourself, and your business, exposed to potential civil fines and penalties, and the potential loss of governmental contracts.
Health Reimbursement Arrangements
While small businesses with less than 50 employees on staff are not required to offer health coverage, they can now legally offer to provide financial assistance for medical and health insurance expenses through Health Reimbursement Arrangements, also known as Health Reimbursement Accounts or HRAs. These are employer-funded benefit plans that reimburse employees for out-of-pocket medical expenses as well as health insurance premiums.
The 2017 change is an opportunity for businesses who cannot provide health insurance to employees to assist with employee health expenses. Previously, HRAs were only legal if an employer offered health insurance coverage, but the 21st Century Cures Act, which was signed into law in December of 2016, now allows small businesses to offer these stand-alone plans without having to provide employees with health insurance coverage. For an individual employee, there is an account limit of $4,950 annually, or $10,000 if an employer chooses to pay for a staffer’s family health expenses.
Other Changes Affecting Small Businesses
New I-9 Form
- A new I-9 form has been introduced to employers and is to be applied to employees hired on or after January 22, 2017. Although the new I-9 serves the same purpose as the older form (to verify employment eligibility), it now includes a .pdf version and “smart” features to validate the information in the data fields and reduce errors. However, even though the new I-9 form includes electronic features, it does not meet the definition of an “electronic form” by the U.S. Department of Homeland Security, which means the form should be printed, signed and stored accordingly by the employer.
Equipment Purchase Increase Under Section 179
- Another business regulations change for small businesses includes a larger tax break on equipment purchases in 2017. The amount that you can deduct under section 179 for equipment, including software, that is purchased and placed into service between January 1, 2017, and December 31, 2017, is now $500,000. Please note, that if you purchase more than $2,000,000.00 worth of equipment during this time, your deduction under Section 179 will be reduced. This change allows small businesses to deduct up-front, rather than depreciate the costs of certain equipment, such as computers, vehicles, manufacturing machines, and furniture. For non-qualifying equipment, businesses can still choose to depreciate.
Standard Business Mileage Reimbursement
- Another change, albeit significantly less, is the reduction in mileage reimbursement under IRS rules. For 2017 the mileage rate was reduced to 53.5 cents per mile, down from 54 cents in 2016. While not a lot, it is worth noting so that you do not run afoul of IRS rules on this issue.
Every year, thousands of changes are made to business regulations and laws in the United States alone. Keeping up with each variance can be difficult and overwhelming. In 2017, big and small businesses will likely see even more changes implemented. With the Texas legislature in session this year, more changes will occur for Texas businesses. If you have any questions about how regulations and changes could affect your business, please contact me.