Paychex Reveals Top Regulatory Issues for Businesses in 2023
This year, funding and tax credit eligibility rose to the top of the list, as business leaders manage the economic impacts of inflation and turn to programs like the Employee Retention Tax Credit and the Inflation Reduction Act. Businesses should also prepare for potential legislation and regulations that could impact how to classify workers, pay workers, and provide paid time off for their workers.
The company's compliance professionals have identified the following topics as key considerations for employers in 2023:
#1 Small Business Funding. Despite the absence of any new federal programs to date, businesses can still take advantage of the funding opportunities carrying over from the COVID-19 pandemic, including:
- The Employee Retention Tax Credit (ERTC). Businesses that paid qualified wages to keep employees working from
March 12, 2020 throughSept. 30, 2021 (and for some certain businesses identified as Recovery Startups, wages could be paid throughDec. 31, 2021 ) have until eitherApril 15, 2024 (for three quarters of 2020) orApril 15, 2025 (for all four quarters of 2021) to file amended returns and retroactively claim the credit. - Paychex Protection Program (PPP). The
Small Business Administration is still accepting applications for Paycheck Protection Program (PPP) loan forgiveness if submitted before the maturity date of the loan. - The Inflation Reduction Act. The Inflation Reduction Act
,doubled the maximum amount of the Research and Development Tax Credit, giving certain businesses in tax year 2023 a chance to claim up to$500,000 annually for qualified research activities. - State Incentives. Some states also continue to sponsor programs that enhance funding efforts to help businesses, including 38 approved State Small Business Credit Initiative programs.
#2 Pay Equity. Pay equity was again on the agendas of state and local legislative bodies in 2022, with more jurisdictions expected to pass legislation in 2023. By the close of 2022, seven states and several local jurisdictions have passed legislation requiring employer pay transparency. Employers will also need to stay on top of federal and state initiatives that may pass in 2023 to address pay inequity through annual reporting similar to the existing California Pay Data reporting and the Illinois Equal Pay reporting intended to mitigate race and gender discrimination in pay.
#3 Worker Classification Guidance. In late 2022, the
#4 Encouraging Retirement Savings. There is a significant chance that a version of SECURE 2.0 will pass before the year's end, substantially impacting the retirement space. Building on the framework of the SECURE Act of 2019, SECURE 2.0 has a handful of key provisions, including an expansion of eligibility for the tax credit when a business establishes a workplace retirement plan, an increase in the RMD age, mandated automatic enrollment for certain retirement plans, even student loan payment matching that aims to counter two crises – student loan debt and retirement savings at the same time.
#5 Wage and Hour Regulations. Based on listening sessions held in mid-2022, it's anticipated that the
#6 Paid Leave. While a federal paid leave program does not appear to be on the horizon for 2023, several states across the country considered legislation in 2022 to provide employees with paid time off to care for themselves and covered family members. Maryland and
#7 Privacy/Cyber Security. With the growth and continued norm of a hybrid and remote workforce, businesses must adapt privacy policies and cyber security practices in a manner that effectively balances the needs of the business, against both employee and customer expectations with respect to the privacy of personal information. Businesses must be clear and transparent about the collection, use, storage, and retention of data. In the absence of a federal privacy law, states continue to broaden the scope of their data protection laws.
"We understand that keeping up with shifting regulations can be a challenge for business owners—and that missteps can have serious consequences," said
Other areas of interest for businesses to consider include tax changes, hybrid and remote work, and healthcare reform. For a full list, visit this top regulatory issues of 2023 article.
Keeping up with regulations is a challenge for today's business owners and HR leaders.
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