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Federal regulations are intended to be an interpretation by administrative agencies of laws enacted by Congress. To say the regulations are out of control is an understatement. According to the 2023 The Ten Thousand Commandments ReportThe previous year, Congress passed 247 laws, while agencies issued 3,168 rules. For small businesses that must comply with many of these rules, the regulatory burden is burdensome, to say the least. And that doesn’t even take into account regulations at the state and local level, which also affect small businesses. Here are some recent regulatory developments to note.
The Ministry of Labor’s Independent Contractor Rule
In January 2024, the U.S. Department of Labor (DoL) issued an order Final rule Which repealed a rule on independent contractor status that had been in effect since 2021 and replaced it with a new rule. The new rule uses a 6-factor test for the purpose of determining whether a worker is an employee (rather than an independent contractor) subject to the federal minimum wage and overtime pay rules. The rule went into effect on March 11, 2024.
Some things to keep in mind:
- The Department of Labor rule does not apply for federal employment tax purposes.
- There are state-level rules used to determine classification of workers according to state wage and hour laws.
- there Number of lawsuits Challenging the Department of Labor’s independent contractor rule.
- there Small Entity Compliance Guide On the new rule.
NLRB’s Joint Employer Status Rule
The National Labor Relations Board (NLRB) enforces rules regarding workers to enable them to form and manage unions. One of the rules (“Final Rule”), which was scheduled to take effect on March 11, 2024, is a new joint employer rule that requires the joint employer to bargain collectively with employees.
a Federal District Court I ordered NLRB Joint Employer Final Rule from effect. Under this rule, an entity will be considered a joint employer of employees of another employer if the two share or determine the basic terms and conditions of employment for the employees.
Some things to keep in mind:
- The NLRB may appeal the decision and things may change in a higher court.
- In the absence of a final rule vacated by the district court, the old standard applies (“2020 Rule”). the 2020 rule It requires “substantial, direct, and immediate control” over the basic terms and conditions of employment in order to obtain joint employer status (i.e., joint employer status is difficult to find under the old rule).
IRS Voluntary ERC Program
During the pandemic, employers may have been able to claim the Employee Retention Credit (ERC) to help them pay wages during closures and business downturns. However, some promoters “sold” the idea that every small business could qualify for the credit and make claims for a refund. Of course, this was not true. The credit expired on September 30, 2021 (December 31, 2021 for startups), with the ability to provide essentially three-year adjusted returns.
The IRS has been looking closely at ERC claims that have been paid and those still awaiting payment. To make it easier for the IRS to deal with false claims, the IRS said employers who are not eligible for the Employee Retention Credit but received payment before December 22, 2023, were able to participate in Voluntary Disclosure Program (VDP). That meant an ERC payment minus 20%. this program Expired on March 22, 2024.
Some things to keep in mind:
- Different procedure Applies to those who received payment after December 21, 2023; They cannot use VDP.
- The IRS continues its civil and criminal investigations against promoters, and small businesses that have used their services may become involved in these investigations.
- Learn more about ERC from tax authority.
Conclusion
Small businesses do not have in-house legal departments or employment law attorneys on retainer. It is up to owners to follow regulatory developments in order to comply with new requirements and avoid penalties or other unpleasant consequences. how to do that? Follow developments through your trade associations as well as small business advocacy groups, such as: NFIB And the SBE Council.
Image: Envato Elements
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