Many of our organizations award employees based on length of service, safety-achievement, productivity goals, employee of the month, employee of the year, continuous improvement metrics, lean six sigma, spot bonuses, etc. What are the tax implications on these employer sponsored awards? Does this impact the employee’s end of the year W-2? How much can we give as an award without impact to taxes? Awarding employees for performance is a great idea, if we do this consistent and fairly. As employers, we need to ensure we follow the IRS guidelines on taxation as well.
Below are 6 requirements for employer related awards:
Employers can deduct a maximum amount for a single employee in a single tax year for both service and safety awards is $400 for an unqualified plan and $1,600 for a qualified plan.
A qualified plan will be established if it is written and if the average combined value of service and safety awards per employee in the given tax year does not exceed $400.
The awards must be defined as “tangible personal property.” Award certificates, cards or credits are not eligible unless they are redeemable only for tangible personal property.
Length of service awards are recognitions that many of our organizations award to employees that work for several years. They may be given tax-free to an employee only on a fifth anniversary and then only once every five years after that; ten, fifteen, twenty, etc. The five-year plan is standard for many organizations.
Safety-achievement awards may be given tax-free to no more than 10 percent of eligible employees in any one years.
Productivity awards are never eligible for tax benefits.
Many other restrictions can and do apply to tax implications related to employer related awards. These are federal IRS guidelines, ensure you review any state and local taxation requirements prior to developing a policy or giving an award. Safety awards, length of service, spot bonuses are great options for organizations. However, if we provide a gift card or award to an employee in March and then it shows up on their taxes at the end of the year, the positive momentum can end quick, if the employee was unaware of the added tax accountabilities during the taxation year. Communicate the tax implications upfront to ensure no confusion or negative feedback. Develop a policy and practice that is consistent throughout the organization. Seek guidance on other questions related to employer related awards, the tax laws can be confusing and complex.
New York State Paid Family Leave provides eligible employees with up to 12 weeks of job protected, paid time off to bond with a new child, care for a family member with a serious health condition, or to assist loved ones when a family member is deployed abroad on active military service. This time can be taken all at once, or in increments of full days.
At 67% of pay (up to a cap)
Employees taking Paid Family Leave receive 67% of their average weekly wage, up to a cap of 67% of the current New York State Average Weekly Wage (NYSAWW). For 2025, the NYSAWW is $1,757.19, which means the maximum weekly benefit is $1,177.32. This is $26.16 more than the maximum weekly benefit for 2024.
Through Legislation S.2928-A/A.06098-A, the definition of “family members” expands to include siblings. This includes biological siblings, adopted siblings, step-siblings and half-siblings. These family members can live outside of New York State, and even outside of the country.
Employer Resources
There are several resources to help employers understand and communicate New York Paid Family Leave benefit updates to their employees.
New York Paid Family Leave provides job-protected, paid time off so employees can:
bond with a newly born, adopted, or fostered child.
care for a close relative with a serious health condition; or
Assist loved ones when a family member is deployed abroad on active military service.
By NYS PFL Definition:
spouse
domestic partner (including same and different gender couples; legal registration not required)
child/stepchild and anyone for whom you have legal custody
parent/stepparent
parent-in-law
grandparent
grandchild
sibling (starting in 2023) Workers should check with their employer’s Paid Family Leave insurer to learn when sibling care goes into effect for their policy. For employees who work for self-insured employers, coverage begins January 1, 2023.
Employees who believe they are eligible for Paid Family Leave should contact their _______ as soon as possible. More information can be found at www.ny.gov/programs/new-york-state-paid-family-leave. Organization will abide by all changes to NYSPFL and communicate such changes to the employees. For additional information please alert your President, or the Statement of Rights Posting on Paid Family Leave.
Legal Area’s and Changes to Remember and Communicate:
Employees have job protection, similar to FMLA.
Paid Sick Leave policies and procedures.
Right to keep their health insurance while on leave.
No retaliation or discrimination against those who take leave.
Citizenship is never a factor in eligibility for NYSPFL.
Review the language contained in your employee handbook, policy, or policy manual. Update FMLA and NYSPFL language to reflect changes and communicate the policy to the workforce.
Communicate PFL payroll deductions for 2020 to the workforce now or during open enrolment. My recommendation is to do this in writing via a template and obtain a signature. NYS has a PDF template referenced above.
Ensure the NYS PFL statement of rights for Paid Family Leave in 2023 is up-to-date and communicated to the workforce. This includes the postings; disability provider or state is providing these postings to employers. Watch the expiration dates on the postings, this is a common area in an audit that needs to be corrected.
A proper call-in procedure for intermittent leave is necessary. Do you accept text messages? What about emails? This should all be clearly communicated in a policy or procedure. How much notice?
New York State Paid Sick Leave
I am happy to work with any employer’s on ensuring policy, communication mechanisms, postings and other NYSPFL material is legal and up to date. Ensure you are reviewing this information annually and communicating changes to PFL rates annually. Work with your payroll provider to ensure and verify the percentage deductions are accurate and live in the payroll system. Remember interns and seasonal employees and communicate if they do or do not qualify for PFL. There are forms to fill out online if they do not qualify to ensure the deduction is not taken.
Frequently Asked Questions
How many weeks of Paid Family Leave are available to employees? Eligible employees can take up to 12 weeks of Paid Family Leave.
How much will employees get paid when taking Paid Family Leave? Employees taking Paid Family Leave in 2025 will get 67% of their average weekly wage, up to a cap of 67% of the NYSAWW of $1,757.19.
What is the maximum weekly benefit? The maximum weekly benefit for 2025 is $1,177.32.
If I start my continuous leave in one year and it extends into the next, what will my benefit rate be? You get the benefit rate in effect on the first day of your leave.
If I start my intermittent leave in 2024, and it extends into 2025, am I eligible for the benefits at the 2025 rate? You get the benefit rate in effect on the first day of a period of leave. When more than three months pass between days of Paid Family Leave, your next day or period of Paid Family Leave is considered a new claim under the law. This means you will need to file a new request for Paid Family Leave and that you may be eligible for the increased benefits available should that day or period of Paid Family Leave begin in 2025.
I am having a baby in 2024; can I wait until 2025 to take Paid Family Leave? Yes, you can take (and must complete) Paid Family Leave for bonding with a new child at any time within the first 12 months of the child’s birth, adoption, or foster care placement, provided that you remain an eligible, covered employee.
I used all 12 weeks of Paid Family Leave in the last year; can I take more Paid Family Leave this year if I experience another qualifying event? You may take up to 12 weeks of Paid Family Leave in every 52-week period based on a rolling calendar. This means that if you used the full 12 weeks of leave, the next time you would be eligible to take Paid Family Leave again is one year from your first day of leave.
What is the weekly employee contribution rate? If you are paid weekly, the payroll contribution is 0.388% of your gross weekly wages and is capped at an annual maximum of $354.53. If your gross weekly wages are less than the NYSAWW ($1,757.19 per week), you will have an annual contribution amount less than the annual cap of $354.53, consistent with your actual wages.
For example, if you earn about $27,000 a year ($519 a week), you will contribute about $2.01 per week.
If you are not paid weekly, the payroll contribution will be 0.388% of your gross wages for the pay period.
What is the maximum amount employees will pay for Paid Family Leave? The maximum employee contribution for 2025 is $354.53.
On March 31, 2024, New York updated the NYSAWW. When does this NYSAWW take effect for Paid Family Leave deduction and benefit caps? The new NYSAWW only applies to the 2025 benefit and will not affect Paid Family Leave deductions or benefits until January 1, 2025, if leave was begun on or after that date. The new NYSAWW does not have any impact on Paid Family Leave benefits in 2024.
What is the NYSAWW that will be used for Paid Family Leave benefits in 2025? $1,757.19.
Fully funded by employees
New York State Paid Family Leave is insurance that may be funded by employees through payroll deductions. For 2025, employees will contribute 0.388% of their gross wages per pay period, with a maximum annual contribution of $354.53.
Employees earning less than the current NYSAWW of $1,757.19 will contribute less than the annual cap of $354.53, consistent with their actual wages.
Here are some contribution and benefit examples at different income levels:
Employees earning $519 a week (about $27,000 a year) will contribute about $2.01 from their gross wages each week ($519 x 0.388%). When taking the benefit, these employees will receive $347.73 per week, up to a maximum total benefit of $4,172.76.
Employees earning $1,000 a week ($52,000 a year) will contribute about $3.88 from their gross wages each week ($1,000 x 0.388%). When taking the benefit, these employees will receive $670 per week, up to a maximum total benefit of $8,040.
Employees earning the NYSAWW of $1,757.19 (about $91,300 a year) or more will contribute 0.388% from their gross wages each pay period until they reach the maximum of $354.53. When taking the benefit, these employees will receive $1,177.32, up to a maximum total benefit of $14,127.84.
The maximum weekly benefit rate for workers’ compensation claimants is two-thirds of the New York State average weekly wage for the previous calendar year, as determined by the New York State Department of Labor (Workers’ Compensation Law §§ 2[16] and 15[6]).
In late February, the IRS released the updated 2018 Form W-4 and an updated tax withholding calculator. The calculator provides an opportunity for employees to check their 2018 tax withholding after the passage of the Tax Cuts and Jobs Act, prior to filling out a new Form W-4.
Do employee’s need to complete a new Form W-4 annually:
“Not necessarily. A W-4 form remains in effect until an employee submits a new one except when an employee claims to be exempt from income tax withholding.”
Employers should ensure they have new W-4s for:
New employees. Employers should keep copies of the most current W-4s on hand.
Employees who had a change in withholding events during the year.
Employees claiming exemption from withholding. To continue to be exempt from withholding in the next year, employees must give employers a new W-4 claiming exempt status by Feb. 15 of that year. If an employee doesn’t give you a new Form W-4, employers must withhold tax based on the last valid Form W-4 for the employee that doesn’t claim exemption from withholding or, if one doesn’t exist, as if he or she is single with zero withholding allowances.”[i]
IRS Publication 15 provides guidelines for employers to remind employees before December 1 of each year to submit a new W-4 form if the withholding allowances changed or will be changing in the next year; due to added dependents, new tax legislation, etc. As employers, we need to ensure all of our new hire paperwork is up-to-date. This recent change should be noted as part of your organizations onboarding/new hire process.
The new law provides employees with additional rights to demand changes to their schedule. The law permits employees to demand two temporary schedule changes per calendar year for personal events. The definition of personal events is broad, which leaves room for interpretation. There are guidelines and certain exemptions to the new rule. However, it is broad and will cover many organizations.
This law codifies the organizations obligation to engage in a cooperative dialogue with any employee who may be entitled to reasonable accommodation. “Specifically, you will need to engage in a good faith written or oral “cooperative dialogue” with the employee addressing:
The employee’s accommodation needs.
Potential accommodations that may address the needs, including alternatives to an employee’s requested accommodation.
The difficulties that such potential accommodations may pose for your business.
After a final determination is made at the conclusion of the “cooperative dialogue,” you must provide the employee requesting the accommodation with a final written determination as to whether or not the accommodation is granted.”[v]
The legislative changes in New York City will not impact employers in the Southern Tier, unless you have employees in the city. However, as we have seen in the past, changes in NYC make their way to Albany, which result in statewide sweeping legislative changes, which can and do impact organizations in the Southern Tier. Continue to watch for legal updates at the federal, state and local level. If you are confused, seek guidance. Legislative change is a continuous process and it can be complex. As society evolves, so do our laws and regulations. Asking questions, attending trainings, working with consultants and attorneys will provide you with a clearer picture of the evolving legislation.
Interested in learning more from me? Check out the options shared here:
In a March 2015 article written by the Society of Human Resource Management, the article provided guidance on separating employee files for relevancy and confidentiality. Employee records can be separated into three types of files. “A general personnel file, a confidential employee file and a common file.”[i] Organizations should always consider and be aware of sensitive information (date of birth, marital status, Social Security numbers, HIPAA protected information, criminal history, court orders, financial history, etc.), that can be included in any of the three separated files. Other considerations should include relevancy to the supervisor or management of the workforce. “Is it related to the employee’s performance, knowledge skills, abilities or behavior?”[ii] This should also be a determining factor, when separating information and organizing new files. Does the supervisor or manager need access to all the information?
The Basic Personnel File (supervisor and manager relevant):
Recruiting information, resumes, job application and academic transcripts
Job descriptions (signed)
Job offer, promotion, rates of pay, compensation information, training records
Handbook and policy acknowledgements (including revised policies)
Recognition
Disciplinary information, warnings, coaching and counseling
Performance evaluations
Termination records, exit interview, closure of the file (goes without writing)
The Confidential Personnel File:
EEO records
Reference and background checks
Drug test results
Medical and insurance records
Child support and garnishments
Legal documents
Workers compensation and short-term disability claims
Investigation notes
Form I-9*
The Common File:
Form I-9 Audits
Form I-9’s* (my recommendation is to put active employee’s I-9’s in a binder that is accessible, confidential and locked in a cabinet, for auditing and reviews).
Regardless of the filing process(s) your organization has implemented, the information contained in any of the employee files needs to be kept confidential and locked in secure filing cabinets. During trainings with supervisors and managers, my statement is simple, treat your employee’s information as it is your own confidential information. The last thing we want is open personnel files on desks, doctor’s notes attached to calendars and unlocked filing cabinets. When an employee exits the organization, I consolidate all files and information into one folder and store in a terminated employee file section, with the exit interview (if applicable). “Maintaining records in separate files as discussed above allows managers, employees and outside auditors to see the information they need to make decisions, yet does not allow inappropriate access.”[iii] Filing and organizing paperwork is not always fun, but it is necessary to ensure legality and confidentiality. If you are confused on employee files and appropriate storage, seek guidance. Electronic files and legal requirements related to electronic filing can vary by state, a thorough understanding of these laws is necessary prior to implementing an electronic filing system. We should be proactive and take all precautions, related to employee records and record retention.
The U.S. Equal Employment Opportunity Commission recently released the “Promising Practices for Preventing Harassment.” This is a guidance document for employers, that contains harassment prevention recommendations for all employers in four categories. As leaders we have a responsibility to take all harassment claims serious and need to ensure a proactive approach to investigations, communication and accountability as it related to workplace harassment claims, sexual harassment, retaliation, bullying, workplace violence concerns, etc.
The Four Categories:
Leadership and Accountability: “The cornerstone of a successful harassment prevention strategy is the consistent and demonstrated commitment of senior leaders to create and maintain a culture in which harassment is not tolerated.”[i]
Comprehensive and Effective Harassment Policy: “A comprehensive, clear harassment policy that is regularly communicated to all employees is an essential element of an effective harassment prevention strategy.”[ii]
Effective and Accessible Harassment Complaint System: “An effective harassment complaint system welcomes questions, concerns, and complaints; encourages employees to report potentially problematic conduct early; treats alleged victims, complainants, witnesses, alleged harassers, and others with respect; operates promptly, thoroughly, and impartially; and imposes appropriate consequences for harassment or related misconduct, such as retaliation.”[iii]
Effective Harassment Training: “Leadership, accountability, and strong harassment policies and complaint systems are essential components of a successful harassment prevention strategy, but only if employees are aware of them. Regular, interactive, comprehensive training of all employees may help ensure that the workforce understands organizational rules, policies, procedures, and expectations, as well as the consequences of misconduct.”[iv]
For additional information on the Promising Practices for Preventing Harassment guidance (each of the four have additional recommendations on the website) for your organization and workforce, the link is below:
Congress passed a law on January 22 to delay the affordable Car Act’s 40 percent excise tax on high-value healthcare plan for two years. The Cadillac tax was set to take effect in 2020, under the new law, the tax will be delayed until 2022.
What to expect in 2022:
$10,200 for individual coverage ($11,850 for qualified retirees and those in high-risk professions).
$27,500 for family coverage ($30,950 for qualified retirees and those in high-risk professions).[v]
Under the new administration we could see significant changes to the Affordable Care Act and healthcare in general. Continue to monitor for updates and changes, that can and will impact your workforce. If you are confused seek guidance, healthcare law continues to evolve in complexity at the federal and state levels.
BURR CONSULTING, LLC 