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Midyear Brings Federal, State Changes for Payroll Professionals

June 17, 2019, 1:29 PM

The second half of 2019 brings with it new wage and hour state laws that are to take effect, including requirements related to wage theft, state and local minimum wages, wage payment, garnishments, exemptions, deductions, meal and rest breaks, and payment on termination.

Federal proposed rules related to white-collar overtime exemptions, joint-employment responsibilities, and regular-rate determinations also are transitioning from public-comment periods to agency reviews.

The Internal Revenue Service, meanwhile, plans to complete its revision of the 2020 Form W-4, Employee’s Withholding Allowance Certificate, this summer. A draft of the 2020 W-4 was released May 30 and the draft instructions were issued June 6. A second draft of the form is expected by the end of the summer, with the final version expected to be released by the end of the year. The revision to the form stems from the overhaul of the federal tax code (Pub. L. 115-97), which took effect Jan. 1, 2018.

State tax-related changes in the second half of 2019 include potential updates to state withholding certificates. Some states that did not yet conform to the federal tax code overhaul advanced their Internal Revenue Code conformity dates to conform to the overhaul.

Employers face changes in workers’ compensation, temporary disability taxes, paid family and medical leave, as well as unemployment insurance compliance.

And by Sept. 30, many employers are to submit data on employee wages as part of an annual U.S. Equal Employment Opportunity Commission report known as EEO-1.

What follows are the nuts and bolts of the state and federal measures that warrant watching by payroll professionals in the coming months.

Doubling Down on Wage Theft

Several measures that crack down on wage theft recently became law in Arkansas, Colorado, and Minnesota. Additionally, Michigan and Wisconsin created government agencies to address payroll fraud.

Arkansas employers found to have willfully committed wage and hour violations may be liable for damages up to the full amount of wages owed under a bill (H.B. 1751) that was signed April 10, 2019, by Gov. Asa Hutchinson (R) and that is effective July 24, 2019. The measure contains a two-year statute of limitations.

The law also is to change several other parts of payroll operations:

•Discharged employees must be paid by the next regular payday under the measure, rather than within seven days. Employers that fail to make wage payment within seven days of the next regular payday would owe employees double the wages owed.

•Employers are allowed to pay employees through preloaded debit cards but requires that workers receive a free withdrawal for each deposit made the card.

•Employers also need only provide an allowance equal to the fair and reasonable cost of board, lodging, clothing, or other items and services, to employees, removing a 30-cent an hour allowance that exists under current law.

A Colorado bill (H.B. 19-1267) that took effect May 16, 2019, after it was signed by Gov. Jared Polis (D), prohibits wage theft with the intent to coerce those who are owed wages and reclassifies wage theft as a felony when wages owed exceed $2,000. An exemption from criminal penalties is removed for employers that are unable to pay wages because of a Chapter-7 bankruptcy action.

In Minnesota, authorizing or engaging in wage theft with the intent to defraud is theft under state criminal law and could result in enhanced penalties under provisions contained in a bill (H.F. 2) that was signed May 31 by Gov. Tim Walz (DFL) and that are to take effect Aug. 1, 2019. Employers’ wage-payment notice and recordkeeping requirements also are expanded under the measure to provide and maintain additional information, and the information contained in employee earnings statements that are provided to employees is to include the basis of pay, meal or lodging allowances, and the employer’s address and phone number. Repeated failures to maintain records as required could result in a fine of up to $5,000 for each failure.

These states join California, Illinois, New York, Oregon, Texas, and Washington, D.C., which have laws that define wage theft.

In Michigan, the state attorney general, Dana Nessel (D), recently announced the formation of a task force to crack down on companies that commit payroll fraud. Wisconsin Gov. Tony Evers (D) signed Executive Order 20 to create a joint-enforcement task force on payroll fraud and worker misclassification.

State Minimum Wage Bumps

On July 1, 2019, the District of Columbia’s hourly minimum wage is to rise July 1 to $14 from $13.25; New Jersey’s hourly minimum wage is to rise to $10 from $8.85 and the tipped-worker minimum wage is to rise to $2.63 from $2.13 (A.B. 15); Oregon’s standard hourly minimum wage is to rise to $11.25 from $10.75, its Portland metro minimum wage is to rise to $12.50 from $12 , and its nonurban counties minimum wage is to rise to $11 from $10.50.

Nevada’s hourly minimum wage and overtime requirements, which typically are adjusted July 1, are to remain unchanged in 2019, the state’s labor commissioner said March 29, 2019. Nevada Gov. Steve Sisolak (D) signed legislation that in 2020 increases the minimum wage (A.B. 456) and requires paid leave (S.B. 312).

On Oct. 1, 2019, Connecticut’s hourly minimum wage is to rise to $11 from $10.10, but the minimum cash wage for tipped workers is to remain $6.38 for wait staff and $8.23 for bartenders, under H.B. 5004. The value of the tip credit that employers take toward the minimum wage is rise to make up the difference between employers’ cash wage and the rising standard hourly minimum wage. So, on Oct. 1, the tip credit for hotel and restaurant workers is to rise to $4.62 from $3.72, or 36.8% of the minimum wage, and is to rise to $2.77 from $1.87 for bartenders, or 18.5% of the minimum wage. The hourly minimum wage for workers younger than 18, except emancipated minors, is to be at least 85% of the hourly minimum wage for the first 90 days of employment or $10.10 an hour, whichever is greater.

Also on Oct. 1, Delaware’s hourly minimum wage is to rise to $9.25 from $8.75.

Colorado’s Division of Labor Standards and Statistics is seeking comments by Aug. 16, 2019, on its minimum wage order regarding whether to expand the categories of covered employees; whether a minimum-salary requirement should be included in the wage order’s administrative, executive, and professional exemption; and what other changes should be given consideration. The division may propose rules based on these questions by Nov. 15, 2019.

Effective Aug. 2, Colorado employers that require tip-sharing by workers must provide to each customer a written notice indicating that gratuities are shared under a bill (H.B. 19-1254) that was signed May 13 by Gov. Jared Polis (D). The notice may be listed on a menu, table, or receipt. Under existing law, employers must post a notice or display a printed card telling customers that gratuities are shared.

The Michigan Supreme Court is to hear oral arguments July 17 on whether the state legislature acted outside the state constitution in 2018 with regard to minimum-wage and paid sick leave measures that took effect March 29, 2019, an April 3 court order said.

At issue is whether the state’s constitution allows the state legislature within a single legislative session to adopt citizen initiatives as legislation and then amend those measures, as the legislature did in 2018 when it converted minimum-wage and paid-leave ballot initiatives into legislation that it amended to significantly limit their provisions.

Local Wage Changes

Colorado localities may boost their minimum wages to more than the state’s $11.10 minimum wage under a bill (H.B. 19-1210) signed May 28 by Gov. Jared Polis (D). The measure takes effect Aug. 2.

North Dakota localities are prohibited from enacting, maintaining, or enforcing requirements for a living wage that exceeds the $7.25 state and federal hourly minimum wages, effective Aug. 1, under a bill (H.B. 1193) signed March 26 by Gov. Doug Burgum (R).

Wage and Hour Coverage, Payment Methods Expand

New Mexico workers employed in private homes to provide domestic services are covered by the state’s wage and hour laws as of June 14 under a bill (S.B. 85) signed April 4 by Gov. Michelle Lujan Grisham (D). Such workers are to be covered by state wage laws that require timely wage payment, that protect workers from unauthorized or unlawful payroll deductions, and that require employers to maintain accurate time and wage-payment records.

Texas employers may pay wages to employees through payroll cards and employees would have to choose not to participate, effective Sept. 1, 2019, under a bill (H.B. 2240) signed May 29 by Gov. Greg Abbott (R). Under existing law, employers may pay wages by cash, check, direct deposit, or another form agreed to in writing by an employee, such as an optional payroll card program.

Texas employers offering payroll cards must issue a written notification to employees advising that the program was adopted. Notification must be at least 60 days before the first electronic funds transfer occurs. Employers also must provide employees with a list of associated fees and must provide a form to opt out of the program if a different form of payment is desired.

Garnishments, Exemptions, Deductions

Arizona garnishments may be issued by using certified mail, effective Aug. 27, under a bill (H.B. 2230) signed March 22 by Gov. Doug Ducey (R). Garnishments that are served by certified mail, return receipt requested, are to be effective on the date that they are received by the garnishee.

The amount of Colorado wages subject to garnishment are changed under a bill (H.B. 19-1189) that is effective Aug. 2, 2019, and applicable to garnishments issued starting Oct. 1, 2020. The cost of health insurance provided by employers and voluntarily withheld from earnings are to be deducted from disposable earnings that are subject to garnishment. Additionally, the information that must be provided in a notice of continuing garnishment is expanded, notice requirements are created, and the time is increased from when a garnishment notice is issued and when garnishment starts.

In Indiana, the amount of wages that may be deducted for the rental of uniform shirts, pants, and job-related clothing or to buy the equipment or tools needed to perform job duties may not exceed $2,500 a year or 5% of the employee’s weekly disposable earnings, whichever is less, under a bill (S.B. 99) signed May 1 by Gov. Eric Holcomb (R). The measure took effect May 1.

Virginia’s state minimum-wage requirements are to apply to newspaper carriers, shoe-shine workers, ushers, doormen, concession attendants, theater cashiers, and those who normally are paid based on the amount of work completed, effective July 1, 2019, under a measure (S.B. 1079) that Gov. Ralph Northam (D) signed March 8, 2019. Those working for employers with up to three employees and babysitters who are employed more than 10 hours in a week also are to be no longer exempt from Virginia Minimum Wage Act requirements.

The amount of Washington wages exempt from garnishment are to rise, effective July 28, 2019, under a bill signed May 13 by Gov. Jay Inslee (D). The greater of 35 times the state hourly minimum wage or 80% of disposable earnings are exempt from garnishment, which would result in $420 a week exempt from garnishment for consumer debt, based on the state’s $12 hourly minimum wage. Existing law exempts from garnishment weekly earnings that are 35 times the federal minimum wage, or $253.75.

The minimum salary that Washington workers would have to receive to be exempt from Washington minimum-wage and overtime requirements would rise in stages to 2.5 times the minimum wage by 2026 under proposed rules that were issued June 5 by the state Department of Labor and Industries. The comment period on the proposed rules opened June 5 and closes Sept. 6, 2019. The department expects the rule to be adopted in late 2019. The first increase to the minimum required salary level for exempt employees would take effect July 1, 2020, with an increase to $945 a week for employers with more than 50 employees and to $675 a week for employers with up to 50 employees from $455 a week. The state’s hourly minimum wage is to rise Jan. 1, 2020, to $13.50 from $12. Public hearings on the proposal are to be heard in several cities from July 15 to Aug. 7.

Meal, Rest Breaks Focus on Accommodations

Kentucky employers that have at least 15 employees within the state in each of at least 20 calendar weeks in the current or previous year must provide pregnancy accommodations, including breastfeeding accommodations, effective June 27, 2019, under a measure (S.B. 18) signed April 9 by Gov. Matt Bevin (R). The accommodations to be provided include frequent or longer breaks and a private non-bathroom space to express breast milk.

Oregon employers must provide employees with reasonable rest periods to express milk and lactation-accommodation requirements are to apply to all employers, not just those with at least 20 employees under a bill (H.B. 2593) signed May 14 by Gov. Kate Brown (D). The legislature is scheduled to close its regular session June 30, in which case the measure would take effect Sept. 30.

Payment on Termination

The amount of wages and other compensation owed to deceased employees in Washington and that may, on request, be paid to the employees’ spouse is to increase to $10,000 from $2,500, effective July 28, 2019, under a bill (S.B. 5831) that was signed April 16 by Gov. Jay Inslee (D).

In Arkansas, discharged employees must be paid by the next regular payday, rather than within seven days, under a bill (H.B. 1751) signed by the governor. The measure is to take effect July 24, 2019.

Louisiana employers reporting unclaimed wages are to do so electronically as of July 1, 2019, the state Department of the Treasury said in a notice on its website.

Federal Proposed Rules Progress

White-Collar Overtime

Workers who earn less than $679 a week and $35,308 a year would be eligible for overtime pay under white-collar overtime-pay proposed rulemaking that was published March 22, 2019, in the Federal Register. The comment period on the proposed rule concluded May 21.

Under the Notice of Proposed Rulemaking, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (RIN: 1235-AA20), the total annual compensation requirement for highly compensated employees would rise to $147,414 from $100,000 annually and employers could use nondiscretionary bonuses and incentive payments, including commissions, to satisfy up to 10 percent of the salary-threshold requirement.

Special salary levels of $455 a week are proposed for Puerto Rico, the Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands. A separate special salary level of $380 is proposed for American Samoa, and an updated special weekly base rate of $1,036 is proposed for the motion picture producing industry. The salary threshold would not be automatic adjusted, but the proposal did request public comment on whether the salary threshold should periodically be reviewed for adjustment, through notice-and-comment rulemaking.

Joint Employment

The Labor Department on May 13 published in the Federal Register a notice that extended to June 25 the comment period that opened April 9 on a proposed rule (RIN: 1235-AA26) to clarify and revise the responsibilities of employers and joint employers to employees in joint-employment arrangements. Previously, the comment period concluded June 10.

Under the proposed rule’s four-factor test, consideration would be given to whether the potential joint employer exercises the power to hire or fire employees, supervise and control employees’ work schedules or employment conditions, determine employees’ rate and method of payment, and maintain employees’ employment records.

For purposes of the FLSA, when employees work for at least two employers, the time worked for any one employer is treated separately, as long as the employers operate independently from one another and have not hired the employee jointly. Where employees are hired jointly by at least two employers, the time worked for all the employers must be totaled to compute overtime.

Meanwhile, more states are defining joint employment. Iowa franchisers are not to be considered the employers of franchisees or of a franchisee’s employees unless certain conditions apply, such as the existence of a written agreement that identifies the franchiser as the employer, effective July 1, 2019, under a measure (H.F. 327) that was signed April 9 by Gov. Kim Reynolds (R).

Iowa joins at least 19 other states that have limited when franchisers may be considered a joint employer, including Ohio, which as of March 20, 2019, does not consider franchisers to be joint employers unless the franchisers agree in writing or a court determines that such a relationship exists.

Other states that have passed legislation defining the employer-employee relationship include Alabama, Arizona, Arkansas, Georgia, Indiana, Kentucky, Louisiana, Michigan, New Hampshire, North Carolina, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, Wisconsin, and Wyoming.

Regular Rate

The Labor Department also on May 13 published in the Federal Register a notice that extended to June 12 from May 28 the comment period on a proposed rule, Regular Rate Under the Fair Labor Standards Act (RIN: 1235-AA24), to clarify and update regular rate requirements under the FLSA to identify what amounts are included in overtime calculations.

Under the proposed rule, exclusions from employees’ regular rates of pay would include:

•the cost of providing wellness programs, on-site specialist treatments, gym access and fitness classes, and employee discounts on retail goods and services;

•payments for unused paid leave, including paid sick leave;

•reimbursed expenses, even if not incurred only for the employer’s benefit;

•reimbursed travel expenses that do not exceed the maximum travel reimbursement that is permitted under relevant regulations;

•discretionary bonuses;

•benefit plans, including accident, unemployment, and legal services; and

•tuition programs, such as reimbursement programs or repayment of educational debt.

--Christine Pulfrey

IRS Moves Ahead on Revisions to Form W-4

On the federal side, the IRS is to complete its revision of the 2020 Form W-4, Employee’s Withholding Allowance Certificate, and new instructions for employers, Publication 15-T, Federal Income Tax Withholding Methods. A draft of the 2020 W-4 was released May 30 and the draft employer instructions were issued June 6.

“The new draft Form W-4 reflects important feedback from the payroll community and others in the tax community,” IRS Commissioner Chuck Rettig said May 31 in a statement. “The primary goals of the new design are to provide simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors.”

Only newly hired employees and those wishing to change withholding amounts in 2020 would need to file a new form, IRS officials said. Employers are allowed to request that employees submit new forms under certain conditions, the agency said. For 2019, taxpayers should continue using the current W-4.

Comments regarding Publication 15-T may be submitted to WI.W4.Comments@IRS.gov until July 8. The deadline for comments on the draft W-4 is July 1. A final draft of Form W-4 is planned to be released in late July, and the IRS said a second draft of Publication 15-T also is possible if comments result in substantial changes.

Revisions to the form and federal withholding methods were needed because the tax code overhaul (Pub. L. 115-97), which took effect Jan. 1, 2018, suspended the use of personal allowances in figuring individual tax liability and doubled the standard deduction. Withholding allowance amounts were tied directly to the number of personal exemptions, and IRS had to change the form and withholding methods to better conform with the calculation of tax liabilities under the new law.

The IRS also continues to promote its paycheck checkup program to encourage employees to ensure an adequate amount of tax taken is withheld from their paycheck this year. The agency offers an online calculator to help with the computations. More information about the online calculator is available at the IRS website.

--Michael Trimarchi

States Continue to Adopt Provisions of Tax Code Overhaul

State tax-related changes in the second half of 2019 include potential updates to state withholding certificates and the beginning of Massachusetts’s paid family and medical leave program, contributions to which are administered by the state revenue department. Some states that did not yet conform to the federal tax code overhaul (Pub. L. 115-97) also advanced their Internal Revenue Code conformity dates to conform to the overhaul.

State Withholding

The Internal Revenue Service’s release of the draft 2020 Form W-4, Employee’s Withholding Allowance Certificate, without withholding allowances May 31 means that some states whose withholding systems still depend on Form W-4 may have to decide whether to continue to follow the federal system or produce their own withholding certificate.

The remaining states that only use the W-4 for state withholding purposes are Colorado, Nebraska, New Mexico, North Dakota, South Carolina, and Utah. Utah only uses the filing status indicated on the form to calculate state withholding.

Of the states that only use the W-4, Colorado and New Mexico moved in 2018 to limit the number of allowances that may be used to calculate withholding, introducing limits of six and three allowances, respectively.
Fifteen states allow either the W-4 or a state withholding form to be used for state withholding purposes.

The District of Columbia, which only uses its own Form D-4, Employee Withholding Exemption Certificate, plans to release a new version of the form after the W-4 is released. The District also retained its 2018 withholding methods for 2019 because of the federal tax code overhaul.

States that may make changes to their withholding methods because of tax legislation passed earlier in 2019 include Minnesota and Virginia. Idaho generally releases updated withholding methods in midyear, while Ohio’s budget for fiscal 2020 and 2021, which is still pending in the state legislature, contains income tax rate reductions.

Conformity, Moving Expenses

Most states now conform to the provisions of the tax code overhaul, either because they automatically follow the most recent version of the Internal Revenue Code, or they follow the code as of a given date on which the tax code overhaul was in effect.

Two states, Arizona and Minnesota, passed legislation in 2019 to conform to the overhaul, effective retroactive to Jan. 1, 2018. The bills mean Arizona and Minnesota tax all moving-expense reimbursements, effective since Jan. 1, 2018. Arizona’s 2018 individual income tax forms assumed that the state already conformed to the changes, the state revenue department said in a notice about the conformity update May 31.

The two states join Virginia in passing legislation in 2019 to conform to the tax code overhaul. Virginia’s bill (H.B. 2529), signed Feb. 15 by Gov. Ralph Northam (D), moved the state’s conformity date to Dec. 31, 2018, and conformed to most provisions of the tax code overhaul, also effective retroactive to Jan. 1, 2018.

The remaining states that could update their conformity dates to conform to the payroll-related provisions of the tax code overhaul are Arkansas, California, and Massachusetts; however, none of the three have taken action to do so in their current legislative sessions.

Four other states that do not conform to the moving-expense changes, Pennsylvania and New Jersey do not generally conform to the I.R.C. Hawaii and New York, two states that otherwise conform to the tax code overhaul, both passed legislation in 2018 to decouple from the moving-expense changes.

Massachusetts Delays Start of Leave Contributions

Employer and employee contributions to Massachusetts’s paid family and medical leave program are to start Oct. 1, after Gov. Charlie Baker (R) and state legislative leaders agreed June 11 to delay the start from the planned July 1 date. A bill making the change (S. 2255) was signed by Baker June 13.

The total contribution is to be 0.75%, up from the originally planned rate of 0.63%. Contributions are assessed up to the federal Old-Age, Survivors, and Disability Insurance taxable wage base, and are divided into a medical leave contribution of 0.62% and a family leave contribution of 0.13%. Employers with at least 25 employees may withhold up to 40% of the medical leave contribution and 100% of the family leave contribution from employee wages, and must contribute at least 60% of the medical leave contribution and any part of the family leave contribution not withheld from employee wages. Employers with up to 24 employees are not required to pay the employer portion of the medical leave contribution.

While the paid family leave program uses definitions from Massachusetts’s unemployment insurance law and is administered by a new state Department of Family and Medical Leave, contributions are to be remitted to the state revenue department using the MassTaxConnect portal. The first contributions are to be due Jan. 31, 2020, for the fourth quarter of 2019, the Department of Family and Medical Leave said.

Employers are required to notify employees of the program by Sept. 30, using a sample notice provided by the Department of Family and Medical Leave or by creating their own notice with the information required by the department, and must also display a mandatory poster explaining the leave program’s benefits. Employers that have their own private leave plan also have until Dec. 20 to apply for an exemption that takes effect for the start of contributions.

--Jamie Rathjen

Unemployment Insurance

Four states determine unemployment tax rates on a fiscal-year basis. Other states announce in the summer and early fall unemployment tax and wage base changes in effect for the next year.

The states that may adjust unemployment tax rates on July 1 are New Hampshire, New Jersey, Tennessee, and Vermont.

New Hampshire generally does not change its range of unemployment tax rates, but an employer’s tax rate may be adjusted to account for changes to the employer’s unemployment experience. Surtaxes also may be adjusted July 1, as the state determines each quarter whether additional assessments or tax reductions are to apply.

New Jersey’s unemployment tax rates were projected to generally decrease July 1, the commissioner of the state Department of Labor and Workforce Development said in April. Tax rates are expected to be determined under Schedule A from July 1, 2019, to June 1, 2020.

Tennessee determines unemployment tax rates every six months and generally announces experienced employer rates effective July 1 to Dec. 31 in late July. Tax rates for new employers, effective for the 12-month period starting July 1, generally are issued in August.

Vermont’s tax rates effective July 1 are to be determined with Schedule 3 for experienced employers, and generally are to decrease for new employers in construction industries.

Colorado, Connecticut, Iowa, Louisiana, Montana, Nevada, South Dakota, Washington, and Wyoming are expected to release unemployment tax rates or wage bases effective for 2020 by the end of the summer.

Nebraska employers assessed the maximum unemployment tax rate for 2020 are to pay taxes on a wage base of $24,000, up from the $9,000 wage base in effect for 2019, under a measure (L.B. 428) signed in May. Employers seeking to avoid being assessed the maximum tax rate for delinquent unemployment tax filing must submit required reports by Dec. 31.

Credit reductions for 2019 under the Federal Unemployment Tax Act are to be announced in November. The U.S. Virgin Islands is the only jurisdiction that may be assessed a credit reduction for 2019 because no other jurisdictions had loans from the federal unemployment account on Jan. 1, 2019.

Workers’ Compensation, Temporary Disability Taxes

Two states that assess payroll taxes for workers’ compensation and temporary disability insurance programs are expected to announce tax rates by the end of the summer.

Ohio’s workers’ compensation payroll assessment for the disabled workers’ relief funds, if in effect for fiscal 2020, would take effect July 1. Ohio is one of four states that assesses a payroll tax for workers’ compensation purposes. Oregon generally releases its payroll tax rate in September, Washington releases its table of tax rates in December, and New Mexico’s workers’ compensation payroll tax is a constant amount set by law.

New Jersey’s temporary disability and family leave insurance tax rates for employers, like the state’s unemployment tax rates for employers, are determined on a fiscal-year basis. Tax rates for fiscal 2020 are generally announced in July, along with the programs’ wage bases for the year.

Paid Family, Medical Leave

The first deadlines approach for reporting and remitting contributions to paid family and medical leave programs that launched in the first half of 2019.

Washington employers are to report and remit paid family-leave contributions for the first and second quarters of 2019 by July 31. The first quarter’s reports originally were due April 30, but the state’s Employment Security Department decided to take additional time to test the online paid family-leave portal.

Employers are assessed contributions at a rate of 0.4% of each employee’s wages up to the federal Old-Age, Survivors, and Disability Insurance taxable wage base ($132,900 for 2019). Employers may pay the full cost of the premium amount, or can require each employee to contribute a maximum of 63.33 percent of the amount of the premium through wage withholding.

District of Columbia employers are to remit paid leave contributions on wages paid April 1 to June 30 to the Department of Employment Security by July 31. Employers are to pay contributions equal to 0.62 percent of each covered employee’s wages.

--Jazlyn Williams

EEOC Collection of Pay Data

The long-running battle between the Equal Employment Opportunity Commission and the Trump administration and business groups over employer-reporting of pay data may be nearing its end.

The deadline for the information, which is collected as part of an annual report known as EEO-1, is Sept. 30, 2019. Employers should submit Component 2 data for 2017 and 2018 under a ruling in a federal district court case (National Women’s Law Center v. Office of Management and Budget, Civil Action No. 17-cv-2458). The case revived collection of the data, which was proposed during the Obama administration but set aside by the Trump administration.

The National Women’s Law Center and the Labor Council for Latin American Advancement filed a lawsuit against the EEOC and the White House Budget Office after the collection requirement was blocked in 2017 by the Trump administration.

The EEOC is to open its collection portal July 15.

Form EEO-1, Employer Information Report, must be filed each year by private employers with at least 100 employees. The survey details the sex, ethnicity, and race of an employer’s workforce by job category. The additional required pay data generally is to be gathered from Box 1 of Forms W-2, Wage and Tax Statement. The information is shared with the Labor Department’s Office of Federal Contract Compliance Programs.

The collection of data is to occur even though an appeal was filed May 3 by the Justice Department to halt compilation efforts, the EEOC said.

Ninth Circuit’s Wage, Hour Cases

The U.S. Ninth Circuit, the largest of the 13 federal appeals courts, may hear a case later this year that could reset the rules for independent contractors and the gig economy.

Grubhub, one of the country’s leading online and mobile platforms for ordering takeout meals, faces the possible reopening of a case that was ruled in its favor. The case (Lawson v. Grubhub Inc., 2018 BL 438360, N.D. Cal., No. 3:15-cv-05128, order 11/28/18) was the first worker-status lawsuit involving the gig economy to reach trial. In the trial, a former delivery driver for Grubhub lost his claim that he was misclassified as an independent contractor under California laws.

A few months after the trial, the California Supreme Court ruled that a three-factor classification is the correct test under state law, abandoning a long-time standard that looked at more than 30 factors (Dynamex Operations W. v. Super. Ct., Cal., No. S222732, 4/30/18). A year later, the Ninth Circuit ruled May 2, 2019, that the California Supreme Court’s standard for determining employee classification could be applied retroactively. The decision means the test created in Dynamex, which made it more difficult for employers to classify workers as independent contractors, would be applied to future cases as well as those decided before the new test.

In another Ninth Circuit case, Walmart Stores Inc. won a review of class certification of worker claims that the company used incorrect legal names on employee wage statements. Employees claimed that the company, which is the largest U.S. private-sector employer with about 1.5 million employees, violated a California law that requires the worker’s full legal name to be included on wage statements and the last four digits of the employee’s Social Security number (Mays v. Wal-Mart Stores Inc., 2019 BL 201965, 9th Cir., No. 19-80029, appeal of class certification granted 5/31/19).

--Michael Trimarchi

To contact the reporters in Washington on this story: Christine Pulfrey at cpulfrey@bloombergtax.com, Jamie Rathjen, at jrathjen@bloombergtax.com, Michael Trimarchi at mtrimarchi@bloombergtax.com, Jazlyn Williams at jwilliams@bloombergtax.com
To contact the editors: Michael Baer at mbaer@bloombergtax.com and Michael Trimarchi at mtrimarchi@bloombergtax.com