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Jan 12 - Federal Policy Update

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TAX REFORM

  • The U.S. Department of the Treasury announced, “Employers have received new withholding guidance from Treasury and the Internal Revenue Service (IRS) in order to implement tax cuts and other provisions of the Tax Cuts and Jobs Act. Employers are encouraged to implement the new withholding tables expeditiously but should do so no later than February 15, 2018. Workers will see changes in their February paychecks once employers adopt the new guidance. The new guidance, developed jointly by Treasury's Office of Tax Policy and the IRS, was constructed to work within the constraints of the existing payroll withholding system in order to  deliver the benefits of the tax cuts as soon as possible, to as many  Americans as possible, and with as little disruption as possible.  Specifically, the withholding tables released today are designed to work with the Forms W-4 that workers have already filed with their employers. This will minimize burden on taxpayers and employers. The new law makes a number of changes for 2018 that affect individual taxpayers.  The new withholding tables reflect the increase in the standard deduction, repeal of personal exemptions and changes in tax rates and brackets. As the IRS makes clear in their release, the new tables are designed to produce the correct amount of tax withholding. The tables are also aimed at avoiding over- and under-withholding of tax as much as possible. To help individuals identify the correct amount of withholding, the IRS will be releasing a new withholding calculator by the end of February which will be posted on IRS.gov. Treasury and the IRS encourage employees to use the calculator once it is released to update their withholding information as appropriate. Additionally, Treasury and the IRS will engage in a thorough and collaborative process to release a new W-4 for 2019 by the end of the year. The process will include seeking input from employers and payroll providers on how best to design a new W-4 to reflect an updated tax system based on the new law.”

LABOR

  • Washington Post reports: “That $5 you leave behind for the server at your favorite restaurant produces a lot more angst than you might think. The laws on tips and who gets to keep them are highly contentious issues inside the restaurant industry. The Trump administration in mid-December waded right into it. The Labor Department has proposed to change an Obama-era rule that said tips are the property of the person who receives them. The Trump administration wants to allow employers to claim the tips if all of their workers are paid at least the state or federal minimum wage, whichever is higher. That would allow employers to re-distribute the wages to the workers who don't receive tips. Wage disparities between the “front of the house” people such as the wait staff and bartenders who receive tips and the “back of the house” workers such as cooks and dishwashers who don’t have produced major friction, proponents of the change say. Allowing restaurant owners to ensure that all workers share the money would resolve the issue.” Read more here: http://washex.am/2DbSZaU
  • Bloomberg reports: “The impending addition of a Wage and Hour Division administrator means the agency could this year advance a few important rulemaking and policy actions that have been teed up for months. An update to the Obama-era overtime rule and a return to sought-after opinion letters are likely first on deck for Cheryl Stanton if she's eventually confirmed by the Senate to run the WHD. Beyond these pressing issues, it's still an open question whether the division will have time to implement changes to the previous administration's minimum wage and overtime enforcement regime. The new administration has faced pressure from the employer community to conduct a wholesale review of prior WHD chief David Weil's investigative approach. To the extent the DOL intends to act on this advice, little progress is evident thus far out in the field. Labor Secretary Alexander Acosta has already signaled a few significant WHD initiatives, such as a more moderate version of the overtime rule and a return to the opinion letters, which are intended to provide fact-specific legal clarity and can provide a shield against lawsuits. In early 2018, when Stanton likely assumes control, the division can begin a fuller implementation of these items.”

MINIMUM WAGE

  • Washington Post reports: What does a $15 minimum wage do to the economy? Economists are starting to find out. “The United States has one of the lowest minimum wages of any advanced democracy in the world. Those low wages are a factor in everything from rising income inequality to high child-poverty rates to high rates of public spending on assistance programs for low-income families. As a result, in recent years there's been a push to drastically scale up the minimum wage, including to $15 an hour by 2024 if some progressive groups have anything to say about it. Conservatives have warned of dire economic consequences if this happens: the elimination of millions of jobs. Steep price hikes. The death of the $5 foot-long. Liberal economists, conversely, say that boosting the minimum wage will lift wages for millions of workers, stimulate the economy and reduce taxpayer spending on assistance programs. Fortunately, a wave of minimum wage hikes at state and local levels in recent years means economists can stop arguing and start digging into some actual data on what happens when the wage floor rises. The preliminary findings of a number of new studies were shared this month at the American Economic Association's annual conference in Philadelphia. The presenters all stressed that the findings were early, incomplete and subject to considerable revision. To view the results for California, Chicago, Los Angeles, Oakland, San Francisco, San Jose, Seattle and Washington, click here: http://wapo.st/2CW9C7a

Reuters reports: Walmart hikes minimum wage, announces layoffs on same day. “NEW YORK (Reuters) - Walmart on Thursday said it will raise entry-level wages for U.S. hourly employees to $11 an hour in February as it benefits from last month’s major corporate tax cut and on the same day said it will shut stores and lay off thousands of workers. The world’s largest retailer and private employer, officially called Wal-Mart Stores Inc, will shutter 63 of its Sam’s Club discount warehouses, or about one tenth of the chain overall, according to a senior company official who declined to be named. Around 50 of those stores will be shut permanently after a review of profitability and up to 12 more will be shut and reopened as e-commerce warehouses, the person said. Every Sam’s Club store employs about 150 workers, bringing the total number of affected jobs to about 7,500, the person said. Many of them will be accommodated in new jobs at the newly opened warehouses and other stores, the official said. Earlier on Thursday, Walmart announced the wage hike, saying it would also offer a one-time cash bonus, based on length of service, of up to $1,000, and expand maternity and parental leave benefits. The layoffs went unaddressed but the wage increase attracted praise from the White House.” Continue reading here: http://reut.rs/2D1Sgt4

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