The start of 2011 brings in several new regulatory, compliance and legislative changes that could affect every company with regard to payroll and benefits for the year.
The increasing complexity of payroll and taxes, including the implementation of a partial payroll tax reduction for employees will affect employers in 2011. Also, the provision providing business tax credits for small companies who purchase health insurance went into effect for tax year 2010 and will carry into the new year. While the provision has some limitations and requirements, it provides incentives to employers to offer health insurance benefits to employees.
Grandfathering remains an important component of the health care reform because health benefit plans existing on March 23, 2010 do not need to add several of the new protections under the new reform law. To remain grandfathered, health benefit plans cannot make any significant changes to the plan.
Similarly, while employees may see larger take home paychecks, employers’ payroll numbers may increase with unemployment insurance funds in many states at critically low levels. Many employers will see state contribution rates increase in 2011 to replenish depleted UI trust funds and repay federal loans taken by these states to continue to pay benefits.
At the beginning of 2011, employers should also watch for:
- The Internal Revenue Service enforcement efforts with an employment-tax audit program focused on payroll misclassification, executive wages, fringe benefits, etc.
- The Department of Labor’s focus on payroll for minimum wage and overtime requirements with increasing penalties for failure to comply.
- 401(k) regulations for employers and benefits administrators to show more transparency.
