Shift work laws are a whole other ball game compared to salaried staff, and have different legal requirements for employers. In this post we’ll give you the rundown on the shift work laws every employer should know. 

What is shift work and how is it different from working a 9 to 5 job?

Shift work is defined as any work that extends past the 8 daylight hours of 9 am to 5 pm. Whereas a traditional 9 to 5 job is exactly what it sounds like—doors open at 9 am and close at 5 pm. 

It’s simple—if your company is open outside of 9 to 5 hours, you’ve got shift workers!

In a 9 to 5, everyone is expected to be at work at the exact same time. Because of the longer operating hours of certain companies, shift workers rotate through different shifts so that someone is always around during open hours. Rotating shift work can be a huge benefit for companies who want to avoid overtime and burnout for their employees. 

That being said, shift workers are entitled to overtime if they go over 40 hours in a work week, while salaried 9 to 5 employees are not. That can be a big draw for employees who want the opportunity to earn more money. Shift work has some pretty great perks like flexible scheduling, possible shift premiums, and you can’t beat the sweet perk of less traffic since you’re traveling outside of rush hour. However, shift work doesn’t come without downsides, like being tough on the sleep schedule and social calendar.

There are lots of ways to schedule shift workers, but no matter which one you choose, there are shift work laws every employer should know. Let’s dive in! 

The importance of shift work laws for employers

If you run a company in an industry where demands are high and the work never ends, it can become easy to let labor laws slip. Skipping breaks, longer shifts, and not enough staff for coverage can creep in. But sticking to labor laws isn’t only the law, staying compliant with government regulations and maintaining staff breaks improves overall employee happiness. Trust us when we say your employees notice.

Your staff needs to know that they’re safe and being taken care of at your establishment. That’s why labor forces fought so hard for regulated labor laws.

If you’re noncompliant with shift work labor laws, whether intentionally or otherwise, two things could happen:

1. You get reported to the Department of Labor’s Wage and Hour Division

Let’s say your timesheets are off and employees are missing overtime on their paychecks. They can file a complaint with the Department of Labor’s Wage and Hour Division who can start an investigation.

An investigation means:

• Meeting with a Wage and Hour representative to learn the steps of what’s about to happen.
• Doing a deep dive into the financial records of the company.
• Examining all payroll records for your employees and any other notes.
• Interviewing some of your employees to corroborate your payroll records and confirm their assigned duties.
• A follow-up from the government to break down all of the findings, determine whether you broke the law, and if so, what the penalty is.

Needless to say, it’s a pretty big deal, and not something you want hanging over your head.

2. You lose good employees

Did you know that it costs the average United States employer $4,000 and 24 days to hire a new worker? Employee retention should be on the mind of every employer that not only wants to maintain employee morale, but also keep more money in the company. If a company isn’t obeying the basic laws set out by the Fair Labor Standards Act, they’re going to find themselves spending a lot of time and financial resources training new employees. Afterall, your team isn’t going to stick around if you aren’t paying them properly.

We really can’t emphasize enough that following the labor laws of your state is the bare minimum any employer can do. We want to help you out, so let’s learn more about the actual ins and outs of the labor laws.

Shift work labor laws employers need to know

Before we tackle the shift work labor laws employers need to know, you should note that every state is different and the laws can vary in small ways. Make sure you fact check our information for your specific state to be safe. 

What is the Fair Labor Standards Act (FLSA)? 

The Fair Labor Standards Act is in charge of establishing 4 key elements of labor laws—minimum wage, overtime, hours worked, and record keeping. They establish the parameters of these laws and then the Department of Labor’s Wage and Hour Division is in charge of investigations for infractions.

So let’s break it down—because it’s important to know specifics about these 4 elements so you aren’t inadvertently breaking labor laws.

1. Labor laws for minimum wage

Minimum wage is legally the absolute minimum you can pay an employee per hour. There are some intricacies in this pretty basic definition though. For example, there are federal minimums and state minimums, and there are 3 different employee categories. Since every state has a different minimum wage—you can find your state here—we’ll talk at the federal level to make it easier.  

As you compare your state vs. the federal minimum wage, know that you need to pay your employees whichever is higher, the state minimum wage or the Federal minimum wage. 

• Federal minimum wage for most employees is $7.25
• Federal minimum wage for tipped employees (such as restaurant workers) is $2.13
• Federal minimum wage for student-learners, full-time students in retail or serving, as well as agriculture or in higher-education, and with a physical or mental disability that reduces their productivity can be lower with the correct applications and certifications. This is called Subminimum Wage Provisions

Why is it important to know this labor law? Underpayment of wages is considered an offense from the FLSA, so knowing what the minimum wage requirement is imperative if you don’t want to be investigated. If you’re finding yourself struggling with compliance, work with a smart payroll system, like the payroll tool from Homebase, which can help you stay on top of meeting all minimum standards. 

2. Labor laws for overtime hours for shift workers

There are no limits to how many hours a week you can schedule your employees but other than a few exceptions for exempt employees, any shift worker who hits more than 40 hours in a work week needs to be paid overtime. 

The formula to calculate overtime is pretty easy. 

Hourly wage x 1.5 x Hours worked above 40 hours = Overtime pay

Let’s look at a quick example. 

Your employee makes $7.25 per hour and worked 45 hours in a week. In this example, your employee’s overtime pay would be $54.38 in addition to their regular pay for their 40 hours. 

$7.25 x 1.5 x 5 overtime hours = $54.38

You can take a look at your particular State’s laws, but overtime hours and rate of pay for overtime are regulated at a federal level for all hourly workers.

Why is this labor law important?  You don’t want to accidentally go over hours and either under pay your employees or go over budget. If you need help making sure you’ve dotted all of your ‘i’s and crossed all of your ‘t’s, use the employee scheduling app from Homebase. The scheduling tool flags if a shift is going to push an employee into overtime so that you can reschedule them or approve the overage—something especially useful when employees want to switch shifts.

3. Labor laws for hours worked

The FLSA doesn’t regulate how many hours your employees work in a day or week or month. What it does regulate is what constitutes hours worked or compensable time. 

Hours worked is defined as, “all the time during which an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace”.

What hours worked means to the FLSA 

• Waiting time: If an employee is “engaged to wait”, this constitutes hours worked. An example would include a morning shift employee who’s stuck waiting for a delivery before they can clock out: technically, that’s time you’re paying for.
• On-call time: If an employee has constraints on their freedom while on call—like a server who needs to wait by the phone at home to see if they’ll be called in for a busy shift—or is on the premises while being on call, these are hours worked.
• Rest and meal periods: Short breaks of 15 to 20 minutes are considered hours worked, whereas 30+ minute meal breaks aren’t. The only exception is if the staff is expected to work while they eat, like if a server is expected to polish silverware or make roll-ups during their lunch. In that case, those are hours worked.
• Training programs: Employees need to have their training hours counted if it’s mandatory, job related, and during normal business hours. For example, if servers are being trained on the new menu, those hours count. If a bartender chooses to upgrade their skills and take a mixology class, those hours don’t count as they’re not being mandated by their employer.

Why is this labor law important? This one is easy to let slip. Maybe employees are answering the phone while eating lunch, or waiting to start their shift while a manager is busy. Either way, these count as hours worked and your employees need to be compensated.

4. Labor laws for record keeping

Make sure to get your record keeping in check. The FLSA requires that employers keep clear records on wages earned, hours worked, and other basic information.  This is pretty standard under other laws and regulations, so you may already have this in place. Let’s make sure!

Here’s what you need to keep records of:

• Your employee’s name, address, occupation, sex, and birth date if under 19 years of age
• The day and hour when your workweek begins
• The total hours worked for each workday and workweek
• The total straight-time earnings for the day and the week
• The regular hourly pay rate for any week overtime is worked
• The total overtime pay for the workweek
• Deductions from wages 
• Additions to wages
• The total wages paid each pay period
• The date of payment and pay period covered

Why is this labor law important? This FLSA requirement is a huge benefit to employers. If anyone ever files a complaint about their place of employment, having impeccable records will help with the investigation process. 

While the FLSA does regulate these 4 key elements of labor laws, it’s important to know what it doesn’t regulate. Here’s a quick list of things the FLSA doesn’t regulate.

• Vacation, holiday, severance, or sick pay
• Number of hours worked in a day or days worked in a week
• Pay raises or fringe benefits
• Meal or rest periods, holidays off, or vacations
• Premium pay for weekend or holiday work
• A discharge notice, the reason for discharge, or immediate payment of final wages to terminated employees

These are all things that you as an employer can decide within your own state’s guidelines, and something employees agree to when hired.

What is predictive scheduling?

Predictive scheduling is pretty simple: employers provide employees with a schedule for their shifts in advance. 

Predictive scheduling was established because shift workers like servers, bartenders, retail workers, and hospital staff who were working on-call schedules were struggling with the unpredictability of their schedules. Even though having workers on-call for times when business might be busy is great for employers, it makes it really tough for employees to have work/life balance.

Predictive scheduling helps part-time workers, shift workers, and hourly workers have a better idea of what their pay will be on a weekly and monthly basis—something that’s much needed in today’s difficult economy.

Let’s take a look at the rules of predictive scheduling.

Give prior notice of schedules

Instead of having a team of employees on-call for every shift, employers need to post the schedule 7-14 days in advance of the first shift scheduled.

Get employee schedule preferences

Employees can submit their shift preferences and request time off before the schedule goes out for the upcoming week. Employers also need to give an estimate of an employee’s schedule when they’re hired so they have an idea of what to expect when onboarding.

Regulate limits on additional hours

If there are shifts available, the current employees need to be notified first before management can hire new employees to fill those shifts.

Give prompt schedule change notification

If you change an employee’s schedule after it’s posted, you’ll need to offer extra pay to the employee. This is called “predictability pay”.

Have mandatory rest periods

“Clopens”—when an employee closes one shift and then opens the very next shift—may be a thing of the past with predictive scheduling. Employers have to give adequate rest periods to their staff in between shifts. The exception is if an employee agrees to work during that rest period.

Maintain proper record keeping

Employers need to keep records of their posted schedules for a length of time in case there are any questions about scheduling and payroll discrepancies.

Which states have predictive scheduling and shift work laws

Want to know if predictive scheduling is mandatory for you?  Here’s a current list of states and cities that have predictive scheduling laws and a list of those that are well on their way. It’s important to note that  this list is always changing, so always confirm with your own state laws or check in with Homebase’s HR compliance team.

List of states and cities that have predictive scheduling laws

• Oregon state
• Chicago, Illinois
• Emeryville, California
• New York, New York
• Philadelphia, Pennsylvania
• San Francisco, California
• Seattle, Washington

List of states and cities that are in the process of instituting predictive scheduling laws

• Boston, Massachusetts
• Los Angeles, California
• Minneapolis, Minnesota
• Washington, District of Columbia
• California
• Connecticut
• Hawaii
• Illinois
• Massachusetts
• Michigan
• New Jersey
• North Carolina
• West Virginia
• Bellingham, Washington

Need an easier way to stay compliant with shift work labor laws?

Homebase can help you keep on top of changing local, state, and federal labor laws. Get started for free.

Shift work laws FAQS

What is shift work?

Shift work is any schedule that takes place outside of the 9 to 5 hours. It involves employees rotating through different shifts doing the same job.

What is the Fair Labour Standards Act (FLSA)?

According to the FLSA website, “The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments.” 

What is predictive scheduling?

Predictive scheduling is the requirement of businesses to post a schedule 7-14 days in advance of the first shift worked. Predictive scheduling is mandatory in some states and cities. It mostly affects industries such as the restaurant industry, retail, and hospitality.

The post Shift work laws: the rules, regulations, and requirements to stay compliant appeared first on Homebase.

So, keeping up to date with at-will laws is essential. Different states honor different exceptions, so it’s important to be aware of what you could get in trouble for depending on where your business is located.

Read our guide to find out what rights you have as an at-will employer and all the possible exceptions that could apply to your business. We’ll also show you how Homebase’s HR Pro tool can guide you through terminations with minimal risk to your business.

What is at-will employment?

At-will employment refers to employers’ legal right to terminate employees for any reason outside of federal and state law protections. And every state except Montana has “at-will employment.” Basically, this law means employers don’t have to state a reason for terminating a staff member or give notice. 

But many states have exceptions to this rule, meaning an at-will employment relationship doesn’t let you terminate your staff for absolutely any reason. If an exception applies to your employee, you have to prove you fired them with good cause. And violating these exceptions can be considered wrongful discharge based on your location and could lead to your employee filing a lawsuit against you.

Federal exceptions to at-will employment

To protect yourself and make sure you’re doing right by your team, it’s best to know the circumstances when you can’t terminate at-will employees. Federal law states two main exceptions to at-will employment, which are discrimination and retaliation. Let’s break down exactly what that means for you. 

Discrimination

There are federal laws, as well as additional state legislation, against firing someone for discriminatory reasons. According to the Equal Employment Opportunity Commission (EEOC), you may not fire an employee based on the following:

• Race
• Color
• Religion
• Sex (including pregnancy, sexual orientation, or gender identity)
• National origin
• Age (40 or older)
• Disability
• Genetic information (including family medical history)

Retaliation 

If one of your staff members reports discrimination, you can’t fire them in revenge, according to federal labor law. In fact, you can’t treat them any differently than you did before or you may face fines. The EEOC says you can’t retaliate against an employee for the following reasons:

• Filing or being a witness in a complaint, charge, investigation, or lawsuit
• Communicating a case of discrimination or harassment to a supervisor
• Answering questions as part of a harassment investigation
• Refusing to follow orders that result in discrimination 
• Resisting sexual advances or intervening to protect others 
• Requesting disability or religious accommodation
• Attempting to uncover potentially discriminatory wages

State exceptions to at-will employment

Many states have their own exceptions to at-will employment — although some have none at all. Three of the most common are:

• Firing employees for following public policy
• Implied contract
• Acting in bad faith

We’ll go into each exception in more detail below and list the states that don’t allow them.

Public policy 

You can’t terminate employees for either:

• Doing something that complies with federal or state laws, or
• Refusing to do something that breaks a law

This is called ‘wrongful dismissal’ and may be a violation of employee rights.

For example, if an employee suffers an injury on the job and files a workers’ compensation claim, you can’t fire them for doing so. And if the staff member doesn’t want to engage in an illegal activity that you request, you can’t terminate them for that reason either. 

And if an employee can prove the termination violates the public policy exception, they may be entitled to: 

• Compensatory damages. The business may have to pay them back for lost income, lost benefits, and/or lost future earnings.
• Punitive damages. If a business’s actions are particularly harmful to the employee, they’ll get extra payments.
• Attorney fees. The employer may have to pay the employee’s litigation and attorney fees.

An example of a business violating the public policy exception

In the case of Fleshner vs. Pepose Vision, a Missouri ophthalmologist fired an at-will employee after she answered a federal investigator’s questions about their overtime practices. Assisting the federal government is public policy. As Missouri honors this exception and the employee could prove she was wrongfully terminated, the business had to pay $125,000 in compensatory and punitive damages.

States that don’t honor the public policy exception

This is the most popular exception, but the following states don’t honor it:

• Alabama
• Florida
• Georgia
• Louisiana
• Maine
• Nebraska
• New York
• Rhode Island

Implied contract

Many states recognize an implied contract exception to at-will employment. That means you can’t fire a staff member when your words, actions, or business practices indicate any kind of job security or alternative termination process. Even if you don’t explicitly promise an employee anything verbally or in writing, the implied contract exception still applies.

For instance, if you offer an employee more senior responsibilities and then fire them, they could claim wrongful termination. You may never have offered them a senior position, but the act of delegating these tasks to them implies a potential promotion and a future with your business. 

Or, you might have included a list of reasons for termination in your employee handbook. If you turn around and fire a team member for a reason you didn’t mention there, they could claim wrongful termination.

If an employee can prove wrongful termination because you broke an implied contract, you’ll probably owe expectation damages. That means paying them what they would have received under the implied contract. 

An example of a business violating the implied contract policy

In Elizabeth Stewart vs. Cendant Mobility Services, a Connecticut business promised an employee that her job was safe after firing her husband. But when he took a job with a rival business, they reduced her hours and eventually fired her. She sued Cendant Mobility Services for breach of implied contract and the court awarded her $850,000. 

States that don’t honor the implied contract exception

The states that don’t allow this exception include: 

• Alabama
• Delaware
• Florida
• Georgia
• Indiana
• Louisiana
• Massachusetts
• Missouri
• North Carolina
• Pennsylvania
• Rhode Island
• Texas 
• Virginia

Good faith

Some states also recognize the “implied covenant of good faith and fair dealing” exception. In other words, you must have a “just cause” for firing an employee that isn’t for dishonest or selfish reasons.

Good faith violations could include making up a reason to fire an employee because you want to hire cheaper labor or because you don’t want to offer them benefits they’re entitled to.

If you fire someone for unjust reasons or break your own policies, an employee can file a wrongful termination claim against you. Courts tend to look at the following to justify these kinds of claims:

• Whether or not you followed your employee handbook
• How long the employee worked for you
• Whether or not you critiqued their performance over time 
• General notions of fairness 

An example of a good faith lawsuit

There aren’t many examples of successful good faith lawsuits against businesses. But it’s still in your best interest to check whether you’re in one of the states that honors this exception to avoid legal action. Because even if a lawsuit is unsuccessful, it can still cause stress, waste time and money, and tarnish your business’s reputation.

In the case of Vander Veur vs. Groove, a Utah business promised to give employees a commission on every TV installation they completed. One staff member had contracted but not finished 30 installations when he was fired, making him ineligible for the extra payment. Later, he filed a lawsuit claiming the business had violated the covenant of good faith.

Although the lower court supported his claim, the Supreme Court didn’t. This was because Groove had explicitly written in the contract that employees must complete installations to receive a commission. But the story became controversial, made news headlines, and generated a lot of bad press for the business.

States that DO honor the good faith exception

As only 16 states follow this exception, we’ll list those instead for simplicity. They are:

• Alabama
• Alaska
• Arizona
• California
• Delaware
• Idaho
• Indiana
• Massachusetts
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• South Carolina
• Vermont
• Utah
• Wyoming

Rights of an at-will employee

We’ve discussed employer’s rights, but what about at-will employees? Here’s what staff with an at-will status can do:

• Quit without advance notice or explanation
• Practice their religious beliefs without interference from their work
• Take time off for medical reasons, including disability and pregnancy
• Take time off for purposes protected by law, like jury duty and voting
• Be treated equally to other staff members regardless of race, religion, gender, age, national origin, or pregnancy status
• Expect their employer to follow their established termination policies — for example, what’s written in the employee handbook
• Comply with state and federal law without fear of retaliation

But at-will employees can’t:

• Refuse to agree to the contract terms  — at-will employment is the default
• Insist on an explanation for dismissal in states that don’t honor the ‘just cause’ exception

Challenges of at-will employment

Hiring at-will employees might seem like an attractive option. It simplifies the termination process and gives you more freedom over who’s on your team. But there are plenty of setbacks that may make at-will employment less appealing to you.

• At-will employment laws are intricate: As we’ve seen, states follow different exceptions that can change at any time. They also might interpret certain exceptions differently. To avoid wrongful termination claims, you may need guidance from an expert HR professional.
• Neither you nor your employees have security: That means your staff members may not feel like they can make long-term plans around their jobs and you risk having to deal with sudden staffing shortages.
• You may face unfair wrongful termination claims: If you fire an employee with just cause but they appear to fall under an exception, you can still face penalties. For example, you could terminate an older employee who’s consistently underperforming and they could perceive your dismissal as age discrimination.
• Your business may have difficulty attracting employees: Most employees want job security. If you don’t provide it but your competitors do, you may miss out on the best candidates.
• Staff relationships may suffer: When employees feel insecure about their jobs, they’ll be less likely to come to the business’s owner or manager for support. But it’s not good to make employees feel isolated and let resentment build up.
• Problems are less likely to get solved: Employees may not report problems or complaints when they’re worried about getting blamed or even fired for them. But it’s important for team members to report all issues that come up as they come with valuable insights and improvement opportunities that help you better your business.

How contract modifications can nullify at-will employment

If a work contract states a specific time for employment or suggests just causes for termination, the at-will status no longer applies. However, businesses typically only draw these kinds of contracts up for high-level employees. 

As a small business owner, you’re more likely to encounter a collective bargaining agreement (CBA). A CBA is a contract that a union and employer negotiate regarding wages, hours, and terms and conditions of employment. These contracts typically include a clause that says you can only fire employees for just cause.

To learn more about when you can fire employees with a contract, check out our article on what counts as just cause for termination and what doesn’t.

Have more questions about termination and at-will employment?

Small business owners and managers generally aren’t deeply familiar with employment law. That’s hardly your fault — you need to prioritize running your business and getting through your ever-growing to-do list.

Protecting your business and the rest of your staff from wrongful termination suits is essential. But how can you do that without hiring an HR manager that you don’t have the budget for? 

Homebase can help. With HR Pro, you’ll get access to certified HR experts who can answer any questions about specific employee situations, review your existing termination policies, and even help you create new ones. And our affordable plans mean Homebase can be your HR manager without the same high cost.

The post What is at-will employment? appeared first on Homebase.

• File your tax returns on time
• Pay your taxes correctly and on time
• Make sure your returns are accurate
• Submit accurate information returns*

With all that in mind, small business owners should ensure they cover all their bases when it comes to payroll forms. But it can be challenging to do that when every form has a different set of requirements, instructions, and due dates.

That’s why in this post, we’ll break down all the essential payroll forms so you understand how they work, which apply to you, and when each is due.

*IRS, 2022

What is a payroll form?

Employers and businesses use payroll forms to report payroll taxes to the IRS. There are a few different types of payroll forms, and each one has a specific purpose. But in general, employers prepare and submit payroll forms to the IRS with a report of the money they’ve paid their employees throughout the year, the taxes they’ve withheld from their employees’ paychecks, and the taxes they’ve paid on their business’s income.

Some of the most common payroll forms that small business owners rely on are:

• Form W-4
• Form W-2
• Form 1099
• Form 940
• Form 941

But there are a few other forms that you might need to use in specific situations, like Form W-9 for independent contractors.

8 payroll forms for small businesses

There are several forms you’ll need to submit in order to stay compliant on both federal and state levels. And you’ll notice that you, as an employer, are responsible for sending these forms to employees, the IRS, or both, which you’ll usually have to file annually or quarterly.

When it comes to filing your payroll forms, you can:

• Fill them out and submit them yourself by mail.
• Ask an accountant or tax professional to prepare and send them in for you.
• Use a payroll software or payroll provider like Homebase to handle your payroll tasks and automatically file your taxes for you.
• Find an authorized e-file provider that takes care of preparing and filing your payroll taxes.

Let’s take a look at some of the payroll forms you’ll likely need to know about for your small business.

1. Form W-4, Employee’s Withholding Certificate

IRS Form W-4 — also called the Employee’s Withholding Certificate or Withholding Allowance Certificate — helps you figure out how much federal income tax to withhold from each employee’s paycheck. When you hire a new employee, you should have them complete a W-4 before their first day on the job because you’ll need it to calculate how much tax to take out of their first and subsequent paychecks.

You should ask employees to review their W-4 form every year so they can update it if a “qualifying life event” occurs, like the addition of any legal dependents or a change in their marital status. When these types of events take place, an employee’s withholding allowance may change and you could be held liable for any incorrect information on their W-4.

Note: You don’t need to submit this form to the IRS, but it’s important to keep a copy saved in your files in case your business gets audited.

2. Form W-2, Wage and Tax Statement

Employers submit Form W-2 — the Wage and Tax Statement — to their employees and the IRS at the end of each year and by January 31st of the next year at the latest. W-2s are a type of information return that are only required for employees you pay in wages or with a salary. They don’t apply to independent contractors or freelancers.

The W-2 details how much an employee earned that year, as well as the total taxes that were withheld from their paychecks. So, the IRS needs a copy of every employee’s W-2 to make sure they’re meeting their tax obligations.

Employees also need to receive their W-2s on time so they can file their yearly tax return, which is due by April 15th. If an employee didn’t pay a sufficient amount of taxes during the year (for their given tax bracket), they’d owe money to the IRS. On the other hand, if the IRS finds that an employee overpaid in taxes throughout the year, they’ll receive a tax refund.

3. Form W-3, Transmittal of Wage and Tax Statements

Form W-3 looks very similar to Form W-2, but employers use it to report how much they withheld from all their employees in total rather than individual employees.

So, the W-3 lists the following:

• The total amount an employer paid out to all of their employees in wages or salary.
• The total amount an employer should have withheld from that pay in social security and FICA (Federal Income Contributions Act) taxes.
• The total amount an employer withheld in FICA and social security taxes.

When you submit your W-2s, you’ll also need to submit a Form W-3 with them. Don’t worry about sending a copy of the W-3 to your employees; the government doesn’t require it.

It may seem redundant — after all, you’ve already sent your W-2s detailing how much you’ve paid individual employees. But the IRS relies on W-3s so they don’t have to compile the total amount you’ve paid in income on their own. W-2s also act as an extra way for the IRS to check that you and your employees have met their tax requirements.

4. Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return

The IRS requires that employers use Form 940 to report their Federal Unemployment Tax Act (FUTA) taxes, which are used to help workers who lose their jobs. More specifically, the IRS passes this revenue onto state unemployment insurance agencies and state job service programs.

The IRS bases the FUTA payroll tax rate on employee wages, and as of 2021, it stands at 6% of the first $7,000 paid to employees.

Here are a few important things to know about FUTA taxes and Form 940:

• Even though FUTA taxes are based on employee wages, employers, not employees, pay them at both state and federal levels. Employers also aren’t allowed to collect unemployment taxes from their employees’ wages or salaries.
• If your company owes the IRS $500 or more in FUTA taxes, you’re required to deposit them at least quarterly.

Employers have to file Form 940 annually, usually at the end of the year or at the beginning of the next calendar year (and typically no later than January 31st).

5. Form 941, Employer’s Quarterly Federal Tax Return

Unlike Form 940, which documents how much an employer paid in FUTA taxes, the IRS uses Form 941 to make sure employers withhold the correct amount of income, social security, and Medicare taxes from their employees’ paychecks. When filling out this form, you’re also required to report how much FICA tax you, as an employer, are paying for the quarter.

There are a few types of employers who don’t need to file this form with the IRS, including:

• Very small businesses that have an annual social security, Medicare, and withheld federal income tax liability of $1,000 or less.
• Seasonal businesses that don’t have any tax liability during the times of the year they don’t operate.
• Businesses that hire domestic employees or farm employees. Businesses that hire farm employees typically file a Form 943, also called the Employer’s Annual Federal Tax Return for Agricultural Employees.

Form 941 is usually due on the last day of the month that follows the end of the quarter. So, for example, the form for the first quarter of the year — January through March — is due on the last day of April.

Small business owners should also know that the IRS has revised Form 941 for the second and third quarters of 2022. They’ve updated it to reflect the expiration of many of the tax relief programs they implemented during the pandemic, such as the COBRA Premium Assistance Credit.

6. Form W-9, Request for Taxpayer Identification Number and Certification

Much like Form W-4, employers use Form W-9 to confirm and verify important employee information like their names, addresses, and tax identification numbers.

But unlike the W-4, the W-9 is typically used for independent contractors or third-party vendors. It doesn’t indicate how much employers should withhold in taxes because you don’t withhold taxes from your independent contractors’ paychecks. Instead, independent contractors who use the W-9 are typically responsible for their own taxes.

Employers can use the information on Form W-9 to create a version of Form 1099: a form that independent contractors use to file their income tax returns. However, you only need to do so if you meet the minimum income threshold, which was set at $600 as of 2021 and 2022.

Bear in mind: You don’t need to submit Form W-9 to the IRS, but as with Form W-4, you should keep copies filed away in your records in case you get audited.

7. Form 8027, Employer’s Annual Information Return of Tip Income

If you didn’t know before, you do now: Employers in the restaurant and food service industries are required to report tips to the IRS. And Form 8027 — the Employer’s Annual Information Return of Tip Income and Allocated Tips — allows you to do that.

Employers in the food and beverage industry also use this form to determine if they need to allocate more tips toward tipped employees. This is an important feature of Form 8027 because if the total amount of tips your employees report comes to less than 8% of your gross receipts for that same period, you’ll need to allocate them more tips to fill in the gaps.

In general, you only have to submit this form if the IRS considers your business a “large food or beverage establishment,” which means your business meets certain criteria:

• It’s located in the 50 states or the District of Columbia
• Tipping is customary for the type of food or beverage workers you employ
• You employ more than ten employees on a typical business day

To determine if you employ more than ten employees on a typical business day, you need to take what the IRS calls the ten-employee test. That doesn’t mean actually counting the number of employees working on a typical day. Instead, the IRS wants you to average the number of employee hours worked on a typical business day, which is why we highly recommend using the IRS worksheet to determine the average number of hours your employees work.

8. Form 1099-NEC, Nonemployee Compensation

Small business owners use Form 1099-NEC — Nonemployee Compensation — to report what they pay independent contractors, self-employed people, freelancers, and sole proprietors annually.

So, for example, if you’re a restaurant owner who regularly pays a third-party produce vendor to deliver fruits and vegetables, you’ll likely need to file Form 1099-NEC.

If you’re confused about this form, it might be because employers reported all nonemployee compensation in box 7 of Form 1099-Misc before 2020. But the IRS updated the 1982 version of the 1099-NEC to account for dual-filing deadline issues that employers were having with the 1099-Misc form.

With that in mind, the due date for filing Form 1099-NEC every year is January 31st, and you’ll also need to submit a copy to your independent contractors if they received more than $600 in compensation.

State tax withholding certificates

Different states have different payroll tax requirements, and some states don’t require you to pay income taxes at all. That means if your state is one of the nine with no income tax, the only state taxes you need to worry about withholding are your state unemployment or State Unemployment Tax Act (SUTA) taxes.

Having said that, your state may or may not require you to fill out a state Form W-4 to determine how much you need to withhold from your employees’ paychecks in state income taxes.

As of 2022, the states that don’t levy state income tax are:

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

And if you’re an employer in the state of New Hampshire, you’re not required to tax employees’ earned income.

If you’re not sure about your situation, you should read through this reference to see if your state requires you to have your employees fill out a state tax withholding form.

Disclaimer: If you’re a business owner in need of complex tax assistance, you should consult a tax professional or accountant for guidance. The advice in this article was not written by a tax or legal professional and should in no way be taken as legal or tax advice.

Need some help with payroll forms?

If you’re a small business owner who relies on spreadsheets and calculators to carry you through tax time, you’re probably no stranger to stress. And it’s not just because you might make some accounting mistakes — you also worry about overlooking a payroll form or two.

If payroll forms leave you feeling overwhelmed, you don’t have to figure them out alone. You can outsource the process to Homebase payroll instead!

When you run payroll with Homebase, our platform will automatically calculate taxes and paychecks, send direct deposits to your team, and pay and file your payroll taxes for you. Plus, your employees get on-demand access to their pay stubs, W-2s, and 1099s in the Homebase app.

And when you use Homebase payroll, you can use our time tracking tools to automatically update your timesheets with the correct hours, wages, and tax withholding information when employees clock in or out, making payroll a breeze from the moment your employees show up for a shift to when it’s time to file your taxes.

The post 8 payroll forms small businesses need to know appeared first on Homebase.

Even though the federal law hasn’t changed, in 2023, 23 states and many cities raised or plan to raise their minimum wage rate. Most of them will start on January 1, but some will start later in the year. If your state starts later, we’ll highlight the date in bold. 

Take a look at the list below. If you want to learn more about the different laws you need to follow based on where you live and work, head to our state labor law guide center.

If you have more questions about staying compliant under state minimum wage laws, Homebase HR Pro can help. We’ll notify you when labor laws change in your area and give you access to HR experts who can answer all your questions.

2023 minimum wage by state

Arizona

Arizona’s rate increased to $13.85 for non-tipped employees based on the Consumer Price Index, and $11.00 for tipped employees. This is a minimum wage increase for the state. 

In Flagstaff city, the minimum wage rate increased to $16.80 per hour. This minimum wage increase is according to the city law. According to the city law, employers can only pay tipped employees $2 less than the minimum wage rate if they can prove that the employee earned at least the minimum wage in tips for all hours worked.

California

Starting from January 1, 2023, the minimum wage rate for all employers in California increased to $15.50 per hour. However, California law does not permit employers to pay a lower wage to employees who earn tips.

There are many cities and counties in California that have raised their minimum wage above $15.50 per hour. These include:

• Alameda: $15.75
• Belmont: $16.75
• Berkeley: $16.99
• Burlingame: $16.47
• Cupertino: $17.20
• Daly City: $16.07
• East Palo Alto: $16.50
• El Cerrito: $17.35
• Emeryville: $17.68
• Fremont: $16.00
• Foster City: $16.50 
• Half Moon Bay: $16.45
• Hayward: $16.34
• Hayward (businesses with under 25 employees): $15.50
• Long Beach (hotel workers): $16.73
• Long Beach (concessionaire workers): $16.55
• Los Altos: $17.20
• Los Angeles: $16.04
• Los Angeles (city & Unincorporated areas of county): $15.96
• Malibu: $15.96
• Menlo Park: $16.20
• Milpitas: $16.40
• Mountain View: $18.15
• Novato: $16.07
• Novato (businesses with under 25 employees): $15.53
• Novato (businesses with over 100 employees): $16.32
• Oakland: $15.97
• Palo Alto: $17.25
• Pasadena: $16.11
• Petaluma: $17.06
• Redwood City: $17.00
• Richmond: $16.17
• San Carlos: $16.32
• San Diego: $16.30
• San Francisco: $16.99
• San Jose: $17.00
• San Mateo: $16.75
• Santa Clara: $17.20
• Santa Monica: $15.96
• Santa Rosa: $17.06
• Sonoma: $17.00 ($16.00 for small employer)
• Santa Monica: $15.96
• South San Francisco: $16.70
• Sunnyvale: $17.95
• West Hollywood (businesses with over 50 employees): $17.50
• West Hollywood (businesses with under 50 employees): $17.00

Colorado

Colorado increased its minimum wage to $13.65 per hour starting from January 1, 2023. The minimum wage rate for tipped employees also increased to $10.63 per hour.

In Denver, the minimum wage for regular employees increased to $17.29 per hour, and for workers who get tips, the new minimum wage rate is $14.27 per hour.

Connecticut 

Connecticut is planning to increase its minimum wage to $15.00 per hour on June 1, 2023. However, the minimum wage rate for workers who get tips will not change. The current minimum wage for tipped employees is $6.38 per hour, but bartenders must be paid at least $8.23 per hour for the hours they work.

Delaware

The minimum wage rate in Delaware increased to $11.75. The tipped employee rate is $2.23, pursuant to Delaware legislation. 

Florida

Starting from September 30, 2023, the state of Florida will increase the minimum wage for regular workers to $12.00 per hour, and for workers who get tips, the new minimum wage will be $7.98 per hour.

This increase is part of Florida’s plan to gradually raise the minimum wage to $15 by 2026.

Illinois

Illinois has a plan to raise the minimum wage to $15 by 2025. In 2023, the new minimum wage rate is $13 per hour for regular employees and $7.80 per hour for workers who get tips.

Employers in Illinois can pay a lower “youth wage” to employees who are under 18 and work less than 650 hours in a year. The youth wage has increased to $10.50 per hour.

New employees who are over 18 can be paid a lower “training wage” for the first 90 days of employment. The training wage is $0.50 lower than the regular minimum wage rate, so in 2023 it will be $12.50 per hour.

Maine

Maine has increased the minimum wage for standard workers to $13.80 per hour, and for workers who get tips, the new minimum wage is $6.90 per hour.

In Portland, the minimum wage is even higher. For employees who don’t get tips, the new minimum wage is $14.00 per hour, and for employees who get tips, the new minimum wage is $7.00 per hour.

Maryland

Maryland has increased the minimum wage for different employers at different rates in 2023. For large employers who have 15 or more workers, the new minimum wage is $13.25 per hour. But for small employers with less than 15 workers, the new minimum wage is $12.80 per hour. The minimum wage will keep going up every year until it reaches $15 in 2025.

In Montgomery County, the minimum wage is going up even more. Starting in July 2023, the new minimum wage will be $16.71 per hour.

Massachusetts

In Massachusetts, the minimum wage rate is now $15.00 per hour for regular employees, as required by state law. But for workers who get tips, the minimum wage rate is lower, and it’s currently $6.75 per hour. The tipped minimum wage rate will also go up as the regular rate increases.

Minnesota 

In Minnesota, the minimum wage depends on how much money a business makes each year, and it goes up to adjust for inflation. If a business makes less than $500,000 a year, the minimum wage rate is $8.63 per hour. But if a business makes more than $500,000 a year, the minimum wage rate is $10.59 per hour.

Businesses that have employees who get tips have to pay the same minimum wage rate as everyone else. They can’t pay less based on how much they earn in tips.

The city of Minneapolis is going to raise the minimum wage even higher. Starting on July 1, 2023, small businesses will have to pay a minimum wage of $14.50 per hour, and larger businesses will have to pay $15.19 per hour.

In St. Paul, the minimum wage rate will keep going up until it reaches $15.19 per hour. After that, it will go up along with inflation. Here are the rates based on the size of the business, starting on July 1, 2023:

• Businesses with 5 or fewer employees: $11.50 per hour
• Businesses with 6 to 100 employees: $13.00 per hour
• Businesses with 101 to 10,000 employees: $15.00 per hour
• Businesses with over 10,000 employees: $15.19 per hour

Missouri

Missouri is passing a new law that raises the minimum wage to $12.00 per hour for regular employees and $6.00 per hour for employees who get tips.

But there’s an exception: if a business makes less than $500,000 a year and is in retail or service, they don’t have to pay the state minimum wage. Also, employers have to pay tipped employees at least half of the state minimum wage rate. But if the employee doesn’t make enough in tips to reach the full minimum wage rate, the employer has to pay the rest.

Montana

Montana is going to increase the minimum wage to $9.95 per hour at the start of the new year. Also, businesses can’t pay tipped employees less than the regular minimum wage in Montana.

Nevada

Starting on July 1, 2023, the minimum wage in Nevada will go up. For businesses that provide healthcare, the new minimum wage will be $10.25 per hour. But for businesses that don’t offer healthcare, the new minimum wage will be $11.25 per hour. Unlike some other states, Nevada doesn’t let businesses pay tipped employees less than the regular minimum wage.

New Jersey

In New Jersey, the minimum wage rate is going up to $14.13 per hour. But for employees who get tips, the minimum wage is only going up to $5.26 per hour.

New Mexico

The state of New Mexico is raising the minimum wage to $12.00 per hour for regular employees based on their new law. But for employees who get tips, the minimum wage is only $3.00 per hour. The city of Las Cruces decided to keep its own rules for tipped employees, and they’re raising the minimum wage to $4.78 per hour.

New York

According to the New York State Minimum Wage Act, the minimum wage rates in New York go up every year on December 31 until they reach $15.00 per hour. This year, the rate is going up to $13.20 an hour for businesses that aren’t fast-food places and are outside of New York City. But for fast-food restaurants and all businesses in New York City, the rate is already $15 an hour.

In Nassau, Suffolk, and Westchester counties, the minimum wage rate is going up to $15 an hour, and they’re doing it together.

Ohio

Ohio’s minimum wage law works like a few other states. It depends on how much money a business makes each year. If a business has more than $372,000 in gross receipts each year, the new minimum wage is $10.10 per hour. But for other businesses, the minimum wage is the same as the federal rate, which is $7.25 per hour. If a business has employees who are under 18, they also get paid the federal rate.

Oregon

Starting from July 1, 2023, the minimum wage rate in Oregon will be linked to inflation as measured by the Consumer Price Index (CPI). This is a number that is put out by the United States Bureau of Labor Statistics. By April 30, 2023, the Bureau will use the CPI to calculate a new standard minimum wage rate.

Rhode Island 

As Rhode Island moves toward an eventual $15 minimum wage rate, the 2023 rate will be $13.00, with a tipped rate of $3.89. 

South Dakota

Starting in 2023, the minimum wage in South Dakota will go up to $10.80 an hour. The minimum wage will go up based on the Consumer Price Index. The law says that the minimum wage for tipped workers will be $5.40 an hour.

Vermont

Vermont’s annual minimum wage increase will raise the rate to $13.18, with an adjusted tipped rate of $6.59. 

Virginia

Virginia increased its rate to $13.00 in 2023, with an adjusted tipped rate of $2.13. 

Washington 

The minimum wage in Washington has gone up to $15.74 an hour. In Seattle, the minimum wage is even higher for some employers. If a company has more than 500 workers or doesn’t pay for benefits, the minimum wage is $18.69 an hour. But if a company has 500 or fewer employees and pays for tips and benefits, the minimum wage is going up to $16.50 an hour.

Labor laws can be complicated, but staying compliant with them doesn’t have to be. At Homebase, we want to make sure you have all the resources you need to stay compliant with HR laws. That’s why we offer Homebase HR Pro – a resource that provides advice and guidance on HR-related compliance.

We do want to make it clear though, that we’re not legal experts, so if you have any legal questions, it’s best to consult a licensed attorney who can help you out.

The post Minimum wage increase by state beginning January 1, 2023 appeared first on Homebase.

How to get your business ready for end-of-year payroll 

Simply follow this end of year checklist to mark off all the boxes and close your final payroll process faster so you can enjoy the holidays and prepare for the year ahead. 

Gather your payroll tax forms

Your team should be able to access their Form W-2 or 1099 (records of wages earned and taxes paid) by the end of January. The Social Security Administration (SSA) and the Internal Revenue Service (IRS) will also be looking for your wage and taxes information around the same time. 

Complete and submit the following payroll tax forms before the start of the year: 

• Form W-2:  Used to report wages and withholdings to the IRS. 
• Form W-3: Summarizes W-2 information and is submitted to the SSA with the W-2s. 
• 1099-NEC: Reports wages for independent contractors. You must report any non-employee wages over $600. 
• Form 1096: Used to submit information returns reporting nonemployee compensation to the IRS.
• Form 940: You’ll need this form to pay your Federal Unemployment Tax (FUTA) liability.
• Form 941: Quarterly form that reports collected employee payroll taxes like federal income, social security, and Medicare. 
• Form 944: If your annual payroll taxes are less than $1,000, you might be able to pay them yearly instead of quarterly. If so, you’ll use Form 944. 
• Form 1095-B: If you provide healthcare benefits, you’ll use this form to document it and submit it to the IRS.  ​​

Run year-end payroll reports

Now is the perfect time to take a look at your year-end payroll reports and determine if you want to make any changes in the new calendar year. 

• Payroll summary report: When you run this report, set the date range from January 1 to December 31. You’ll get a nice summary that details tax withholdings, gross and net wages, deductions, and other general information. 
• Retirement contributions: Pulling up all employer and employee contributions to retirement accounts will give your team members a chance to alter how much they give to it next year. 
• Workers’ compensation report: Did you pay out any workers’ comp to your team this year? Your insurance provider can use the information in the report to reassess your premiums.
• Employee summary reports: Use it as a comprehensive look into wages, deductions, and tax withholdings for each employee or contractor. 
• PTO report: Run a PTO report to avoid staffing mishaps by reviewing all paid-out PTO and remaining hours per employee.

Verify information before the end of the year

Ensure everything is accurate and up to date. Double-check your company name, tax IDs, and other tax details first, and then verify your team information is correct:

• Employee names
• Social Security Numbers
• Updated addresses
• Phone numbers

Fix any errors and let your payroll provider know that you made changes. 

Check wages, taxes, and benefits

Verify that all wage, tax, and benefits numbers match what’s in your payroll information, including: 

• Annual PTO accrual
• Filing status (exempt or non-exempt)
• Year-to-date wages and taxes
• Pre-tax numbers
• Worker status (active, terminated, or on leave)

You can find most of this information on your team’s W-4 forms. 

Order W-2s 

If you don’t have a full-service payroll provider and run it manually, you’ll need to order paper W-2s (and 1099s for contractors) from the IRS. These can take 10 business days to arrive in the mail, so plan accordingly. 

Update payroll information

Your payroll information will need to be updated before your first run of the new year. Check for new tax rates in your area, adjust employee information, balance PTO, and tweak yearly deductions. It’s also important to update your payroll schedule and make it available to your team. 

File and deliver W-2s or 1099s

You are legally required to provide employee W-2s to your team, and 1099s to any contractors by January 31. They use these documents to submit their own tax filings. 

These forms must also be submitted to the SSA by January 31. Depending on where you live, you may also need to file them with your state or county. The W-2s will need to be accompanied by W-3 forms. You can file for an extension, but that request must be submitted after January 1 and before the filing deadline. 

Submit tax Forms 941, Form 940, & Form 944

You’ll need to pay your fourth quarter FUTA tax with Form 940, as well as federal income taxes and FICA with Form 941. And finally, you’ll need to submit Form 944, an annual return of all paid payroll taxes. These forms are all due on January 31. 

The last payroll of the year is much easier with help from a full-service provider like Homebase. Our payroll software willWe’ll handle the tax calculations, distribute forms, and file your taxes for you so you can focus on making the most of your time off during the holiday season.

The post The complete year-end payroll checklist for small businesses appeared first on Homebase.

However, the United States Department of Labor issued a final rule that modifies wage and hour rules for tipped employees. Take a look at the changes below. If you have questions, Homebase HR Pro provides live access to certified HR experts. 

Note: While the federal minimum wage has not been increased for 2023, many states are increasing their rates. Check out our article on 2023 state minimum wage increases. 

Additionally, many states are also changing their family and medical leave laws for the new year. You can learn more about what’s required in your state in our article on upcoming paid and unpaid leave changes. 

Tip credit regulations 

The DOL announced a final rule under the US Fair Labor Standards Act (FLSA) that regulates how employers can take tip credits if they have tipped employees. The rule sets limits on how much time tipped employees can participate in “non-tipped” activities at work while the employer takes a tip credit. 

Under the new rule, employers can only take a tip credit from an employee’s wages for the hours spent on tip producing work or work that directly supports tip producing activities. Employers can take a tip credit for for time spent on tip-producing work when: 

• The employee spends less than 20% of workweek hours on activities that support tip-producing work. This means employers can’t take a tip credit for any time spent on these activity that exceeds 20% of the workweek. 
• The employee spends less than 30 minutes performing activities that supports tip-producing work. This means employers can’t take a tip credit for time spent on these activities that exceeds 30 minutes. 

Activities that support tip-producing work can include things like refilling ketchup bottles, setting tables, preparing food, or cleaning. 

The final rule goes into effect December 28, 2021. 

Tip pooling and managers

The DOL’s final rule also addresses tip pooling limits and how managers can keep employee tips. A 2018 law prohibited managers from keeping tips “for any purposes, including allowing managers and supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.” 

However, the new rule lays out a couple of circumstances where it’s OK for managers to take tips. The rule says that managers can keep tips from customers for services that they directly and “solely” provide. This means that if a manager is the only one who helped the customer, they can keep the tip. 

The rule also allows managers to contribute those tips to a mandatory employee tip pooling or tip-sharing arrangement. 

Tip-rule penalties

The same DOL rule increases the penalties for tipping violations. Under the new legislation, the agency may fine employers up to $1,100 each time the employer is found to be retaining employee tips, regardless of whether the violation is willful or repeated. 

The definition of “willful” under the rule include violations that are committed with “reckless disregard” for the laws laid out in the FLSA. An employer is in reckless disregard when they should have checked the FLSA to see if their conduct was legal, but did not do so. 

The post Federal labor laws: What’s new in 2023? appeared first on Homebase.

As of today, there are 22 states with COVID-19 vaccination requirements for certain types of employees, namely nursing home and healthcare workers. Of these state plans, some are using “vaccinate or terminate” strategies while others allow employees to partake in weekly testing. 

There are also 12 state laws that ban business owners from mandating vaccinations among employees or punish workers based on their vaccination status. 

These laws are constantly changing. We will update this article as more states implement regulations around what you can and cannot do in terms of COVID vaccination requirements. 

You can also take a look at your state labor law guide to learn more about legislation in your area. 

States with COVID-19 vaccination requirements

California

Employees of health and human services facilities must receive a vaccine. State employees, as well as those of private and public school, must be fully vaccinated or undergo weekly COVID-19 testing. 

Colorado

All state employees must receive vaccines or undergo weekly testing. Licensed healthcare employees must receive the vaccine. 

Connecticut

Long-term healthcare facility employees and childcare workers must receive the vaccine or undergo weekly testing. Non-compliant facilities will pay a fine of $2,000 per day until they comply. 

Delaware

The following types of employees must receive the vaccine or undergo weekly testing: 

• Long-term care and other healthcare facilities 
• Public and private school educators, staff, contractors, and volunteers
• State employees

District of Columbia

Public school and city employees must receive the vaccine or undergo weekly testing. All healthcare workers must receive the vaccine. Employees can receive religious or medical exemptions, but they must undergo weekly testing. 

Hawaii

State and county employees, including public school employees, and state contractors must receive the vaccine or undergo weekly testing. 

Illinois

State employees who work in congregate care facilities must be fully vaccinated. Healthcare workers, school personnel, and childcare employees must receive the vaccine or undergo weekly testing. 

Maine

Healthcare workers, EMS personnel, and dentists must be vaccinated or be excluded from the workplace during the public health emergency. 

Maryland

State employees of congregate care facilities and nursing home or hospital workers must be vaccinated or be subject to strict mask protocols and weekly testing.  

Massachusetts

Employees of long-term care facilities, as well as state executive branch personnel, must receive the vaccine. 

Minnesota

State employees who are working in person must be fully vaccinated. 

Nevada

State employees must receive the vaccine or undergo weekly testing. 

New Jersey 

Healthcare facility employees and state contractors must receive the vaccine or undergo weekly testing. State employees and school personnel must receive the vaccine or undergo testing at least once or twice a week at minimum. 

New Mexico

State and school employees must provide proof of vaccination or undergo weekly testing and wear a mask while in the workplace. All hospital and congregate care employees must receive the vaccine or qualify for an exemption. 

New York

All state employees and school personnel must receive the vaccine or undergo weekly testing. Healthcare workers must receive the vaccine. 

North Carolina

State employees must receive the vaccine or undergo weekly testing. They must also wear a mask at the workplace. 

Oregon

State employees, healthcare workers, and school personnel must be fully vaccinated. 

Pennsylvania

State employees in healthcare congregate-care facilities must receive the vaccine or undergo weekly testing. 

Rhode Island

Healthcare facility employees must be fully vaccinated. 

Vermont

State executive branch employees must be fully vaccinated or undergo weekly testing and wear a mask at work. 

Washington

State executive branch employees, on-site contractors, volunteers, public and private healthcare workers, and workers in educational settings must be fully vaccinated. 

States that prohibit vaccination requirements

Alabama

Private businesses may not refuse to serve a customer based on their vaccination status. 

Arizona

COVID-19 vaccination requirements are prohibited. 

Arkansas

Vaccinations cannot be required as a condition of employment, except for state-owned medical facilities. 

Florida

Businesses may not require customers to provide proof of vaccination. 

Georgia

State and local governments may not require individuals to provide proof of vaccination for access to government facilities and services. 

Idaho

State and local governments may not require individuals to provide proof of vaccination for access to government facilities and services.

Michigan

Entities that receive public funding, aside from healthcare facilities, may not require vaccines as a condition of employment. 

Montana

Businesses may not refuse to provide services or goods from someone based on vaccination status. 

New Hampshire

Vaccinations may not be a condition to receive public goods or services. 

South Dakota

State employees may not be required to receive the vaccination as a condition of employment. 

Tennessee

Policies requiring COVID-19 vaccines are prohibited. Businesses can’t require customers to provide proof of vaccination. 

Utah

Businesses that require vaccinations as a condition of employment must allow workers to submit exemptions. Employers must pay for COVID-19 tests. 

The post COVID vaccine mandates by state: requirements and bans appeared first on Homebase.

Take a look at the list of employment laws that will go into effect next year. Then, head to your state labor law guide to give yourself a refresher on laws like minimum wage, paid leave, and more. 

If you need help understanding these laws or want to get answers to other compliance questions, Homebase HR Pro can help. When you sign up, you’ll get live access to certified advisors who can review your employee handbooks, help you set new policies, and more. 

2022 California labor law changes

Gov. Greg Newsom recently approved many California labor laws to take effect in 2022. Unless otherwise noted, all of these laws go into effect on January 1, 2022. Familiarize yourself with these new regulations so you can stay compliant in the new year. 

COVID-19 reporting (AB 654)

California legislators enacted AB 685 in 2020, which laid out COVID-19 exposure reporting/notification rules. AB 654 took this legislation a step further and updates several areas of the previous law. The new legislation changes reporting requirements and stipulates that employers have either 1 business day or 48 hours (whichever is later) to report employee outbreaks of the virus. 

Reporting the outbreak includes giving written notice to all employees who could have been exposed to the virus at the worksite, as well as local public health agencies. Employers do not need to provide notice on weekends or holidays. 

The original law exempted certain groups of employers from reporting outbreaks to local public health agencies. The new law adds the following business types to the list of exempted industries: 

• Adult health day centers 
• Community clinics 
• Community care facilities
• Child daycare facilities 

In a multi-worksite environment, employers now only need to notify employees who were working at the same location as the workers who got the virus. 

The law also modifies cleaning and disinfection plan reporting. Previously, employers were required to notify all employees and employers of subcontracted workers. Now, employers must only notify employees and employers of subcontractors who were at the same location as the affected individual within the infectious period. 

Note: This law took effect on October 5, 2021. 

Warehouse distribution employee wage and hour rules (AB 701)

Employers with large warehouse distribution centers must provide written descriptions of all quotas employees are responsible for. “Large distribution center” means the employer has:

• 100 or more workers at a single warehouse
• 1000+ employees at any number of warehouse distribution centers in the state

Quotas can include:

• The number of tasks they need to perform within a certain period of time
• The minimum amount of materials that need to be produced or handled in a workday or workweek. 

The law also requires that employers have a written description for any potential punishment that employees could expect if the quotas are not met. Additionally, the new law prevents employers from punishing employees for not meeting a quota that was never disclosed to them. 

Employers also cannot punish workers for failing to meet a quota that:

• Does not give them time to take their required meal breaks or rest periods
• Interferes with their protection under occupational health and safety laws. 

CFRA expansion (AB 1033)

The latest amendment to the California Family Rights Act (CFRA) changes the definition of “family members” to include parents-in-law. This means that if an employee’s mother- or father-in-law has a serious health condition that requires them to be taken care of, the employee can legally take the leave to do so. 

Silenced No More Act (SB 331)

The Silenced No More Act largely prohibits non-disclosure clauses for all forms of workplace harassment or discrimination of any protected status under the Fair Employment and Housing Act (FEHA), not just sex. However, the law does not prevent non-disclosure clauses for the settlement money paid. 

The law also limits the use of non-disparagement clauses (meaning clauses that prevent the employee from saying anything negative about the business) or other provisions that limit the employee’s ability to share workplace condition information. If a provision like this is included in a written policy or procedure, it must include the following: 

“Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.”  

Food delivery tip distribution (AB 286)

Under this new law, food delivery platforms are no longer allowed to keep money designated by the customer as tips. The person delivering the items must receive all tips or gratuities, and any tips given for a pickup order must be paid in their entirety to the establishment that provided the food. 

The law also makes it illegal for a food delivery platform to charge a higher rate for food or beverage than what the food establishment sets. 

Recordkeeping requirements (SB 807)

SB 807 now requires employers to maintain employee AND applicant personnel records for a minimum of 4 years. However, if an employee files a complaint with the Department of Fair Employment and Housing (DFEH), employers must keep all related records until they receive notice that the agency resolved the issue. 

Wage theft criminalization (AB 1003)

AB 1003 makes wage theft a criminal offense that is punishable as grand theft. Wage theft includes stealing wages, tips, benefits, or other forms of compensation from workers for amounts greater than $950 from 1 employee and $2,350 for two or more employees in any 1-year period. 

Note: the law also includes independent contractors under the definition of employee. 

Cal-OSHA rebuttable presumption (SB 606)

SB 606 creates a “rebuttable presumption” (an assumption that the court considers true unless someone can prove otherwise) that an employer has committed an “enterprise-wide” violation (a violation at multiple worksites) if Cal-OSHA determines that either: 

• A written policy or procedure violates 25910 of the Health and Safety Code
• The employer demonstrates a pattern or practice of the same violations at multiple worksites

Note: Cal-OSHA does not need to investigate other worksites or observe violations before issuing citations. Employers can receive citations for worksites that the agency did not inspect if they find a violation in a written policy at one of the worksites. 

Egregious violations

Additionally, the law implements new “egregious violations.” These will result in a separate penalty for each employee impacted by the violation. 

The organization considers the following to be “egregious violations”: 

• The employer intentionally made no “reasonable effort” to eliminate the violation 
• Worker fatalities, worksite catastrophes, or a large number of injuries or illnesses occurred as a result of the violation
• Persistently high rates of worker injuries or illnesses occurred as a result of the violation
• The employer has an extensive history of previous violations 
• The employer has previously demonstrated that they disregard health and safety 
• The employer’s conduct as a whole demonstrate bad faith in terms of providing a safe work environment
• The employer has significantly undermined an implemented safety and health program’s effectiveness by committing a large number of violations. 

The law additionally gives Cal-OSHA new subpoena authority. The agency now has the power to “issue a subpoena if the employer or related entity fails to promptly provide the requested information.” This means employers can be subpoenaed if they do not provide requested information in a “reasonable” amount of time. 

Need help with these new California labor laws?

If you own a business in California, it’s important that you learn these new labor laws to maintain compliance. Luckily Homebase HR Pro is here to help clear up the confusion. With your account, you’ll get live access to certified experts who can answer any questions you may have. Sign up today and take advantage ​​of the modern tools you need to manage your team.

The post California labor laws: a list of 2023 changes appeared first on Homebase.

It’s easy to make compliance mistakes, especially when it comes to hourly employees. To help, we’ve laid out five common wage and hour mistakes and the best ways to avoid them.  

What is the Fair Labor Standards Act (FLSA)?

The FLSA first went into effect in 1938. Employers often complain that it’s complex, cumbersome, and changes too frequently for them to fully understand. One major thing the FLSA wage and hour act does is require employers to pay most employees a minimum hourly wage. 

As of 2023, that federal wage is $7.25 per hour. States also set an hourly minimum wage, and employers must pay employees the higher of the two.

Another component of the FLSA is that it distinguishes between exempt and non-exempt employees. Exempt employees must have a job classification of administrative, computer repair or information technology, executive, outside sales, or professional. They must also receive a minimum weekly and annual salary since they are not eligible for overtime pay.

Most small business employees will be classified as non-exempt. They receive an hourly pay rate and must receive overtime, or time and a half for any hours worked over 40 in one week. 

The most common wage and hour issues

1. Misclassifying employees

When it comes to paying employees, the most common mistake employers make is misclassifying non-exempt employees as exempt or regular employees as independent contractors. 

The mistake is typically not intentional. Usually, it’s due to the employer not understanding that the job title of non-exempt employees must fall into one of the accepted categories. Let’s break down the differences between exempt and non exempt employees. &nbsp

Exempt employees

An exempt employee is someone who is not entitled to receive overtime pay for working more than 40 hours per week. They  are usually paid a fixed salary instead of hourly wages.

Non-exempt employees

A non-exempt employee is someone who is entitled to receive overtime pay for working more than 40 hours per week. They are usually paid hourly wages.

Understanding the difference

Since the FLSA created exempt job categories decades ago, current job titles don’t always fit neatly into one of the law’s descriptions. If you need help understanding the laws, Homebase HR Pro can help you understand and apply FLSA correctly to avoid fines and other sanctions for misclassification. 

This includes deciding whether a person who works for your business on a part-time or occasional basis should receive the classification of regular employee or independent contractor. You must follow an IRS checklist regarding control of the worker’s time, who pays for supplies, and other factors when making this determination.

2. Deducting money from an employee’s paycheck for poor job performance

You may feel like you shouldn’t have to pay employees who don’t perform their job duties to expectations. But federal laws are on the side of employees in this matter. You can’t withhold any funds for attendance or performance issues if the employee has worked even a portion of a week. 

The following exceptions apply:

• You may withhold pay when employees miss two consecutive days of work for reasons not pertaining to disability, illness, or pre-planned time off.
• Deductions can take place when employees commit a major safety violation and when the employer imposes them in good faith.
• You don’t have to pay employees when they have suspended them from work without pay for serious misconduct. Common examples include reporting to work under the influence of drugs or alcohol, sexual harassment, violence on the job, or violation of a federal or state law. You must have a written policy regarding unpaid suspensions in place before they can withhold pay from employees.
• Employees do not receive pay when they take the voluntary Family and Medical Leave Act (FMLA) unless they use their personal time off or sick leave to cover a portion of it. 

3. Deducting pay for short rest periods

The FLSA states that employers don’t need to pay employees for meal breaks 30 minutes or longer. Shorter break periods of 15 or 20 minutes must be paid as long as employees work a certain number of hours per day.

Employers should avoid using timekeeping software that automatically deducts for meal periods. The reason for this is that employees may not get to take the allotted time for lunch or dinner due to the company being short-staffed or an urgent work matter. 

Rather than requiring employees to prove how much time they took away from work for a meal, you should have them clock in and out instead.

4. Not paying employees for training time, travel time, or meetings

Federal law requires employers to pay employees for attending meetings and completing training unless they meet all four of the following criteria:

• The event takes place outside regular working hours
• Attendance is not mandatory
• The training or meeting is not related to an employee’s job
• Employees do not complete any productive work while completing a training session

5. Not keeping proper timekeeping records

You must maintain a hard copy of all timekeeping records for two years — and demographic and other data related to pay for three years. Here are some examples of data government agencies expect employers to keep on all employees:

• Full name, mailing address, and social security number
• Job title and salary
• Date of birth for employees under age 19
• Hours worked each day and week
• Overtime pay
• All mandatory and voluntary deductions from an employee’s paycheck

Using a single timekeeping system and conducting periodic audits of payroll records can both go a long way to helping small businesses stay on track with work hours and wage payments. Homebase makes it easy to not only automate your payroll processbut also maintain required records in an easy way. 

Get started with Homebase today to see how easy paying your employees can be.

The post 5 common wage and hour mistakes every employer should avoid appeared first on Homebase.

Non-competes, also known as restrictive covenant clauses or covenants not to compete, can also stipulate a period of time that the employee cannot work for a competitor after separating from employment. 

State governments continue to tighten restrictions on non-competes across the country. State laws in North Dakota and Oklahoma prohibit the enforcement of the contracts—and California doesn’t recognize them at all. 

Many states also recognize their own non-compete standards. They state that the agreements shouldn’t meaningfully restrict an employee’s ability to get another job with long time periods or geographic scopes. 

Regardless of where you live, it’s a good idea to seek legal advice from employment law firms before implementing this type of agreement into your business policy. 

In 2022, 3 states are changing their laws around the contracts. Take a look at the laws below, and check out your state labor law guide to learn about more labor laws in your area. You can also check out upcoming employment law changes in our articles on minimum wage increases and paid leave legislation. 

Additionally, if you need help staying compliant with labor laws, Homebase HR Pro provides live access to certified experts who can guide you through any questions you may have. 

Non-compete agreement law changes by state 2023 

Nevada 

The Nevada Unfair Trade Practices Act went into effect October 1, 2021. It prohibits employers from asking employees paid solely on an hourly wage to sign a non-compete agreement. 

The law also says employers cannot prevent former employees from providing services to a former customer for the following reasons: 

• The former employee didn’t seek out the client relationship
• The customer chose to seek services from the former employee
• The former employee is complying with the rules of the agreement in all other ways. 

Oregon 

Oregon is expanding on its existing non-compete law beginning January 1, 2022. At the start of the new year, the state will limit the duration of non-compete agreements to 12 months after termination of employment. This time period is 6 months less than the current law that stipulates 18 months. 

The change does not impact any non-compete agreements that currently exist. 

Additionally, Oregon is now requiring that employees must make an annual gross salary of $100,533 to be subject to a non-compete. 

The law still includes the existing regulations: 

• Employers must provide written notice to new employees in the employment offer at least 2 weeks before the first day of work that a non-compete is required. 
• Employers must provide a signed, written copy of the non-compete agreement within 30 days of termination. 
• Employees must qualify as “exempt” and there must be a legitimate business interest that proves the contract is used to protect the employer. 

The contract is considered “void” and “unenforceable” if the above requirements are not met. 

Illinois

Gov. J.B. Pritzker recently signed a bill amending the Illinois Freedom to Work Act. The changes prevent employers from entering into non-compete agreements with employees who earn $75,000 or less. Additionally, employers cannot require non-solicitation covenants with employees earning $45,000 or less. 

A non-solicitation covenant prevents former employees from providing services to customers of their former employers. 

Both non-competition and non-solicitation agreements are illegal unless: 

• Adequate consideration is given to the employee
• The contract is necessary for a valid employment relationship
• The agreement does not require further than what is needed to protect the legitimate business interest of the employer. 
• The agreement does not impose an undue hardship on the employee
• There is no harm to the public through the agreement.

Before entering into one of these agreements with an employee, employers must: 

• Provide at least two weeks for the employee to review the contract 
• Inform employees with written notice that they can speak with an attorney before signing the agreement. 

If an employee wins a lawsuit against their employer over a non-compete or non-solicitation agreement, the employer must pay the employee’s attorney fees. 

Washington DC

The  D.C. Ban on Noncompete Agreements Amendment Act of 2020 was delayed and will go into effect on April 1, 2022. The law forbids employers from requiring or requesting a non-compete clause in employee contracts. 

The Act also prohibits workplace policies that don’t allow an employee to have another job, operate their own business, or provide services to someone else. Additionally, employers may not retaliate against an employee because they:

• Refuse to sign a non-compete agreement
• Fail to comply with one
• Complain about a non-compete because they believe it to be illegal

Pursuant to the Act, employers must provide a written notice that says:

“No employer operating in the District of Columbia may request or require any employee working in the District of Columbia to agree to a non-compete policy or agreement, under the Ban on Noncompete Agreements Amendment Act of 2020.”

Employers must provide notice within 90 days of April 1, 2022, 7 days after hiring an employee, and 14 days after an employer receives a written request for it. 

Note: The federal government recently weighed in on non-compete agreements through President Biden’s Executive Order on Promoting Competition in the American Economy. In this order, Biden asks the Federal Trade Commission to limit the use of this type of agreement. However, there is currently no federal law prohibiting them, although the Supreme Court has overturned them in the past.

The post 2023 non compete agreements by state appeared first on Homebase.