Each year, new technologies, systems, and legal changes impact payroll practices at the federal and state levels. From paid leave to international work visas and unemployment, government regulations often vary state by state, compelling businesses to remain attuned to the latest developments that affect their company and employees.
In this article, we’ll address new trends and developments in payroll services specific to the state of Florida. We’ll also address national developments and proposed legislation that could impact payroll policy for Florida-based businesses in the near future.
Classification of Workers
Since incorrect worker classification can lead to financial and legal penalties, many employers utilize IRS Form SS-8 to ensure their workers are appropriately classified and in compliance with federal law. In broad terms, the IRS and U.S. Department of Labor use common law rules, which classify a worker as an employee if their employer controls what work they do, and when and how their work is done. Under these conditions, a worker is technically considered an employee and protected under the Fair Labor Standards Act (FLSA), which regulates overtime, recordkeeping, child labor, minimum wage, hours worked, and more.
In the Spring of 2022, the National Labor Review Board closed the open submission of briefs and proposals regarding updated standards for determining independent contractor status at the federal level. Changes to federal classification terms for independent contractors could occur in 2022 or 2023 as a result of this review process.
At the state level, changes to worker classification are already unfolding. Two states – California and New Jersey – now use the “ABC test,” which designates workers as independent contractors only if they meet the following criteria:
- They are typically/regularly engaged in independent trade or business outside of their relationship with the employer in question
- They are free from the employer’s direction and control
- They perform work that is outside the core or standard operations of the employer’s business
Currently, in Florida, a worker is deemed an employee or independent contractor through a “right of control” test that includes the following criteria and more:
- The length of time the worker is employed
- The scale of the employer’s “right of control” over work details
- Whether the work completed is a part of the employer’s regular business operations
- Whether the employer provides the place of work, tools, or necessary instruments to complete assigned work
- Whether the work is completed under direct supervision or independently (without supervision)
COVID-19 Vaccine Policies – Federal and State of Florida
At the federal level, OSHA has withdrawn its rule mandating COVID-19 vaccines or testing for employers with 100 or more employees. Nevertheless, OSHA has indicated that it will attempt to formulate a new and lasting COVID-19 Healthcare Standard and has not officially withdrawn its Emergency Temporary Standard as a proposed rule.
Regarding Florida policy, HB 1B (specifically, Florida Statute § 381.00317) prohibits private employers from mandating COVID-19 vaccination unless the employer offers employees individual medical, religious, or COVID-19 immunity exemptions, or allows the employee to comply with regular testing or use employer-provided personal protective equipment.
Hours, Wages, and On-Demand Pay
Definitions (and regulations) of hourly employees and independent contractors vary significantly from state to state; in some cases, this is complicated further by local laws that dictate minimum wage standards within municipalities.
Although the Department of Labor still indicates that the federal minimum wage is set at $7.25 per hour, the Biden administration instituted a minimum wage rate of $15 per hour in early 2022, which – for now – exclusively applies to federal workers and those working on federal contracts.
Many states have also adopted legislation that sets minimum wage rates at a higher level than the established federal standard of $7.25. In some cases, these are subject to annual adjustments based on the Consumer Price Index (CPI). In Florida, the minimum wage is currently set at $10 per hour and $6.98 per hour with a cash wage for tipped employees. The Florida minimum wage rate will progressively increase to $15 per hour by 2026.
Note: On-demand pay is a growing national trend that has developed as a consequence of financial hardship that occurred during the COVID-19 pandemic. Through a partnership with a third-party service (and requiring a nominal employee fee), some employers have granted employees access to their wages as they earn them, which has proven particularly useful for hourly employees in need of more immediate or regular access to their earned income.
Disaster Tax Relief
In the event of disasters like hurricanes, business operations (including payroll and tax management) can be thrown into disarray. In response, the federal government and affected state governments may provide disaster tax relief to employers.
The IRS offers general tax relief guidelines and disaster victim FAQs for businesses affected by natural disasters. In light of recent events impacting Florida residents and businesses, a new IRS page offers dedicated, region-specific resources for those affected by Hurricane Ian.
In response to Hurricane Ian, the IRS issued News Release IR-2022-168, which offers broadscale tax relief (via filing extensions) to most individuals and businesses in the state of Florida. At the state level, the Florida Department of Revenue issued Emergency Order #22-003, which extends filing due dates for Florida businesses operating in counties affected by Hurricane Ian. This includes extended reporting periods for sales, use, and reemployment taxes and other tax categories.
For regular updates regarding Florida corporate income tax extensions and general Florida Disaster Relief news, visit the Florida Institute of Certified Public Accountants (FICPA) Disaster Relief page.
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Navigating federal, state, and local payroll laws can be an overwhelming process for any business. At CAVU HCM, we offer integrated software, resources, and expertise to help you streamline payroll, remain legally compliant, and file your Florida state taxes with confidence. Contact us today to start our collaboration.