Name: jeff kuzmich - Migrate_Top_Regs_2026_01142026_5147055
Uploaded: 2026-02-26T06:25:43.521Z
Duration: 1 h 57 s
Description: jeff kuzmich - Migrate_Top_Regs_2026_01142026_5147055

Transcript for "jeff kuzmich - Migrate_Top_Regs_2026_01142026_5147055": Hello, and welcome to today's webinar. Today's audio is through your computer speakers only. There is no call in number. To refresh or reload your webinar browser session, for a PC press the F5 key or Mac press command R. To download and print today's content and to access additional resources, refer to the Files and Resources window. If you have questions during today's webinar, you can notify us through the Ask Us a Question window. Please note that it may not be possible for us to address each question submitted individually. However, all questions are valuable in helping us develop additional resources for your business. Calls will pop up on your screen along with a ringtone. Be sure to click Submit to record your choice. And to ensure you see the pop up polls, be sure you have disabled all pop up blockers on your device. At the close of the webinar, we invite your feedback on our session evaluation. Please note, this presentation does not constitute legal advice and is for informational purposes only. Thank you again for joining us. We will now transition into today's topic. Hey everybody and welcome. It is Gene Marks speaking to you. Very, very happy that we are here and talking about some issues that are very, very important. I am here remotely speaking to you in all my paychecks gear as well. I got the shirt on, got the background. I don't work for paychecks, but I work very closely with paychecks and you know, the shirt is free. So I figured why not wear it, you know? Alright, let's get down to business and we'll talk about today's webinar and today's agenda and what we plan, on covering. Okay. This is like the top regulatory issues that are facing your business in mind. I run a company outside of Philadelphia. I am a CPA. We're a financial consulting firm. I have 10 employees. I have a number of contractors. There are a number of things that are affecting my business, so I have lots of questions. I want to pay close attention to this, the information that's going to be presented by our experts and maybe chime in once here and there as well. So today, we're going to highlight the 2026 federal regulatory agenda that's going on. Tax law, government shutdown, employment law is what we're going to cover, retirement plans, AI and privacy, all these things are regulatory issues that absolutely affect your business. We're going to discuss the impact on your businesses, all these different regulations. And in addition, we're going to learn what actions that you should be able to take to really make sure that you're protected and you are in good shape. Then we're also going to provide you guys a bunch of resources that will help you as well throughout the year so that you make sure that you're on the right side of a fall and make sure that you're on the right side of compliance. Okay. So we have a number of great panelists, three excellent panelists that are going to be joining me today to cover the areas of their expertise. Bill Gossam is Compliance Analyst at Paychex. He is in his 20 with Paychex. He currently serves as the lead liaison between US government tax agencies and Paychex. You thought your job was hard. He's helping the company, with all sorts of clients maintaining their compliance with federal payroll laws. He and his team work to ensure that paycheck systems, and operational processes all meet, federal, state, and local payroll tax compliance requirements. So we're gonna be hearing from Bill in just a minute. Zach Keep, when he's not climbing mountains, is a manager of compliance risk at Paycheck. He's got more than fifteen years of experience in the retirement plan compliance industry. Zach is familiar with the particulars of ERISA and non ERISA 401ks, 403bs, four fifty seven plans. He holds a QKA designation from the ASPPA. As a retirement compliance manager of Paychex, he works a team of four retirement analysts posting a combined six decades of compliance experience. In addition, Zach manages a team of analysts who support the increasingly complex privacy telephony and AI compliance world. So, as always, I love talking to Zach. He'll be up soon as well. Finally, Jared Rudder, HR services risk partner at Paychex. Jared has over twenty five years of experience in HR in his current role. He collaborates and partners with HR professionals and supports Paychex clients with their workforce needs. He's also a PHR certified and SHRM CP certified and is based in Charlotte, North Carolina. So a great bunch of experts that are here to fill you in. So listen, you don't wanna hear me talk that much. You really wanna hear from our experts. You make sure that you're in good shape. We have sixty minutes to cover in this webinar. So let's get into it. Bill is our first expert who's gonna be talking about tax law and taxes starting with no tax on overtime. Bill, I'm going to hand it over to you. Thanks Gene. Welcome everybody. We am excited to give you guys some information in relation to some of the changes that we are going to be seeing and some of them that we already have been seeing. So I certainly hope that everybody is aware of the One Big Beautiful Bill Act, which was signed into law back in July 2025. Obviously, were a lot of things in that bill, but some of the specific ones that we're going to cover that directly impact payroll tax, excuse me, not necessarily payroll tax, but do impact your employees and some of the wages they earn. And that's no tax on tips and no tax on overtime. I think that the name of that is a little bit misleading because it's not really no tax on tips and overtime. It's a deduction that these individuals are going to be able to take on their personal income tax. So like I said, it was part of the One Big Beautiful Bill Act. It's two separate provisions, one for the no tax on tips and one for the no tax on overtime. So let's start with the no tax on tips. So this provision is for tax years 2025 through 2028. And what this basically means is that any individual that's in an occupation that typically receives tips and gratuities on a voluntary basis is eligible to deduct up to a certain amount from their payroll taxes excuse me, I'm sorry, their personal income taxes. And it's very important to note that the word voluntary is the key here. It has to be something that is not forced upon the customer like service charges or mandatory tips or parties of eight or more, etc. It has to be something that is 100% the customer's discretion to give to the individual that is providing the service. It is going to be limited to specific occupations. The Treasury Department has come up with roughly 70 different categories of occupations that qualify for the deduction. And the deduction limit is limited to $25,000 per tax return. It's important to note that. So if you are file single or at a household, you get a $25,000 limit deduction on your tips and gratuities. If you are a joint filer, if you're married and you file jointly, that $25,000 limit is the limit for both you and your spouse that you're filing the joint return with. So it's important to note that it's not per individual for the tax, no tax on tips, it's for the tax return. It's a little bit different for no tax on overtime. Again, the provision's the same as far as it's available for the same tax years as a no tax on tip. It only applies to the portion of the overtime as defined under the Fair Labor Standards Act. And it is only the premium portion of that overtime. So in other words, FLSA has the provision is to pay 1.5% of your wages. Only the 0.5% is what is deductible for the no tax on tips. The deduction is different from the no tax on tips, the limit. The limit is $12,500 per individual or $25,000 for a joint filer. So again, this is a little bit different from the tax, no tax on tips. You are allowed to take the deduction per individual. Like I said, 12,500 if you filing single, 25,000 for both individuals on a joint return. And then these are going to be reported on Forms W-two starting in 2026. Couple things to know as an employer, the payroll process in person to this is that you still withhold federal income tax and FICA taxes on your employees paychecks. Nothing changes there. Like I said, the deduction is taken at the end of the year when your employees file their individual returns. So you are still required as an employer to withhold the normal taxes that you always do. For 2025, the IRS did issue transition relief, basically stating that you don't have to report these amounts on the W-two for tax year 2025. They are strongly encouraging that employers do provide this information to their employees. It's going to make it a lot easier for employees to be able to figure out what exactly dollar amounts they need to use to figure out these deductions. But for 2025, due to the timing of when the bill was signed into law, the IRS just isn't going to make it mandatory for 2025, but it will be mandatory starting in 2026. Right now the IRS has draft copies of the Form W-two and the instructions for 2026 They haven't been finalized yet, so we're still expecting that there's probably going to be some clarification on some of the requirements, exactly what specifically needs to be reported, how to report it, etc. So just keep an eye out for that stuff to look for. The other thing that you might want to encourage your employees to do, especially in occupations that typically receive tips or typically earn overtime, they may want to possibly redo their W-four for tax year 2026. The W-four itself did not necessarily change however, the IRS did add worksheets into the W-four instructions which help an individual to better figure out their withholding based off of potential tips, potential overtime. So it might be something that would be worthwhile for employees to at least take a look at, consult with a tax advisor and you know, possibly adjust their withholding for 2026 just so that they get a more accurate withholding moving forward. Bill, before we move on to the next slide, I do want to say to all of you guys are watching that Bill's doing a great job. We're limited in time on this on this webinar. We are kinda scratching the surface of some of the issues with these no tax on tips things. On February 4 at 02:00 eastern time, we're gonna be doing a deep dive into no tax on tips and what employers should know and frankly what your employees should know as well. So there is a button there for you to register for that. They'll take you right to the link. I strongly recommend that you attend that webinar. I'll be involved in it as well and we'll go into much greater detail. And as you can see on your screen, there was poll question that came up. Hopefully you'll get the opportunity to answer that as well so that we can move on. And speaking of moving on, Bill, let's dig into research and development. Thanks, Jean. And again, appreciate your plug for that upcoming webinar. So some of the other changes that came out of the One Big Beautiful Bill Act that probably impact a good chunk of employers and businesses around the country. The research and development deduction was modified based off of the bill that was passed. It made permanent deductions that were part of the Tax Cuts and Jobs Act of 2017 that were set to expire at the end of last year. And so what this bill did is it extended them. And so basically for tax years, after 12/31/2024, businesses can elect to fully deduct domestic R and D costs in the year that they incurred, or they can choose to amortize them over sixty or more months. Typically, you know, before, if you had to amortize them, now you can take them in the year that they were incurred. So what qualifies as expenses? It's any activity that eliminates the uncertainty in developing or improving a research effort, and it basically impacts directly employees that directly perform the research, anybody that supervises the research, or anybody that provides any sort of direct or indirect support to that research effort. It's available to any business, any size, any industry. The only stipulation is it must be a US based R and D expenditure. Transition rules that the bill allowed for basically applies to certain small businesses with unamortized amounts from tax years 2022 to 2024. Businesses can elect to deduct any remaining unamortized domestic R and D costs either entirely in 2025 or they can spread them between 2025 and 2026. And then small businesses, if you meet certain gross receipts requirements, you can retroactively apply the full expensing rules for 2022 through 2024 if you file an amended return by 07/04/2026. How does this impact employers? It improves your cash flow, obviously. You're going get immediate savings based off of taking these deductions. It's going to give you more money available to reinvest in your research efforts and just basically makes it a lot easier for these businesses to continue doing what they've been doing. It's important to review your expenses going back to 2022, see what you might be able to take advantage of now as opposed to having to continue to wait to get those dollar amounts. Determine the best deduction strategy for your business. You know, obviously consult with your own tax advisor. You know, the two of you can figure out what is the best course of action for you moving forward based off of these provisions from the One Big Beautiful Bill Act. Great. Hey Bill, one final thing. Also want to just chime in. Have a bunch of, I have a number of clients, a couple of manufacturers that come to mind that didn't even think that they would be eligible for these research and development deductions. I just want to say to you guys that every business does research and development. I mean, it's a wide definition of what could qualify Even if it's market research, it could be new products, new samples, things like that. So I wouldn't discount it just because you're not in technology or your pharmaceutical company. You may actually be eligible, to qualify for this deduction for some of your expenses. Talk to your accountant about this. It's worth a five minute conversation just to make sure. All right, let's keep moving on. So the work opportunity tax credit has expired, right Bill? Absolutely Gene. Yep. As Gene said, the Work Opportunity Tax Credit, it did expire on December 31. In past years, there's always been extensions to it, but obviously this past year December 31 came and went and there was no extension to it. So as of right now, if you typically took advantage of the WOTC, you can't do it anymore, but we'll have to wait and see what happens with that moving forward. You know, it was a it's a tax credit for hiring individuals that come from certain typical backgrounds that may not necessarily gain employment as easily as others. And so if you hire those individuals and they qualify, you are eligible for certain tax, you were eligible for certain credits that you could take on your returns and everything. So basically, what should you do moving forward? Like I said, I mean, there's no extension, there was no extension, but there are still a lot of talk in DC around possibly extending this. While there's no actual formal bills that have been presented in Congress, It's talked about all the time. There's a lot of rumblings that it's going to be attached to certain bills moving forward. So you're just going have to keep your eyes open and see if it does get extended. And if it gets extended, is it something that's retroactive? Is it something that is effective when it's signed again? So there's a lot of moving pieces with this. Know, I can't say one way or the other whether it's going to get extended, but definitely this is something to keep an eye out on, especially if it's something that you've always or you think you're eligible for definitely keep an eye out to see what happens with this moving forward. Sounds good. All right. So listen. We we are all still, believe it or not, feeling the impacts of this most recent government shutdown, slowed down a lot of services that I know a lot of clients are still waiting on. And then, of course, as we're recording this right now and it's mid January, still looming in front of us is another potential shutdown at the end of this month, although there has been some progress made in congress on on health care. So, Bill, let me turn it over to you. Maybe you can you can give us a little bit of an update on where things stand with this with the government shutdown so people watching can know and can prepare. Yeah, thanks, Jean. Great points. You know, as Jean said, you know, just came out of the longest shutdown in US history back in from October through December excuse me, November. A lot of things affected a lot of people and everything. It did end on November 12. The main sticking points, one of the main reasons why the shutdown happened was ACA subsidies. It was ACA subsidies were not part of the continuing resolution that move forward to reopen the government. So there's something that's still there, there has been some movement on it, as Gene stated. Hopefully we're going to see something moving forward. Know, basically, you know, right now the premium tax credits that allowed health care in the marketplace to be more affordable to people. They expired. Current projections are showing that the average increase is approximately 26%. And that's causing a lot of people to have to make tough decisions on whether they want health care coverage or not. So there are there have been rumblings that that they're going to get resolved. But again, nothing has come to fruition as of yet. Right now, the these extensions that opened the government back in November are set to expire again on January 30. You know, the only thing that is permanently or excuse me, not permanently, but at least funded through all of fiscal twenty twenty six were, you know, the legislative branch, agriculture, military construction, veteran affairs, everything else is set to run out of money on January 30. I mean, this is going to affect state department, treasury department, Justice, Homeland Security? So obviously, a big deal. Obviously, nobody wants another shutdown to happen. So, you know, Congress is working feverishly to appropriations in place. Again, the ACA subsidies seem to be the biggest sticking point, but there does seem to be some headway in making progress there. Again, we're just in a wait and see game, and hopefully something gets done sooner rather than later on that. Well, Bill, that was great. Thank you very much. As usual, the information you provide is just fantastic. It's super helpful. And I'm glad that we are all up to speed on this. Regarding the government shutdown and regarding the expiration of the Work Opportunity Tax Credit and of course some of the items that you've mentioned. Let's let's let's carry on now. Jared's gonna come up and talk a little bit about the workplace. We have regulations both that are, new and changed and updated, worker classifications over time. And I think Jared, you're gonna start off with discussing a little bit about paid family leave, which is a huge benefit that employers need to know about and what their options are. And let's all not forget as we head into this discussion that our employees have needs, dependent care needs, family needs, people desire flexibility. It is a hugely requested benefit, not too far behind healthcare and retirement. So as employers, I think it's our responsibility to make sure that we know what's available to us to offer and what we can do and what benefits we can get for offering this to our employees. So let's start with that. Know, Peter, I may leave and Jared, why don't you take it over? Jared, you want me to go to the next slide? There we go. I don't hear Jared speaking. Do you guys hear Jared? Bill would you you be willing to jump in or would you like me to go through these slides? How comfortable are you talking? It might be better for you Gene that this is not my area of expertise. Yeah, that's completely fine. I'm more than happy to talk about that. Listen, there is So everybody, so paid family leave obviously is not something that we're going to see a lot of movement on at the national level. This current administration right now, their approach to a lot of the workplace laws are to push these decisions down to the states. And because of that, depending on where you live and where your business is operating and by the way, where your employees live as well, have to pay special attention to how your state is handling paid family leave. So for example, there are some up here. There's Delaware and Maine, Minnesota, Maryland, all have paid family leave, you know, plans and rules and regulations about what should be done. For example, in Delaware, you're withholding from employees that that you know, for family members begin or began actually, in 2025. The employees can go start claiming these benefits later. Maine also has withholding for family leaves as well. Minnesota, is starting it now this year in 2026. Maryland, you know, now must plan to withhold because that's going to start in in 2027. And those are just, you know, a few of the states that have this sort of mandated paid family leave. Okay. So just bear in mind. Yep. I can hear you, Jared. You can hear me. Okay. Yeah. I don't know why that continues to happen, but I appreciate you covering for me and hopping in there. I was just getting on a roll too. Do you want to pick it up on the slide? Yeah, so let me get caught up here. Sure. There we go. So, and what I did want to point out and Gene mentioned this earlier as it pertains to some of the earlier topics, what we're going to discuss today not only with the paid family leave but with the other employment law topics that we'll focus on. We're more or less gonna scratch the surface. For time purposes, we're not gonna have an opportunity to really dive into the details with this stuff. But sticking with the topic of paid family leave, I mean, are a variety of responsibilities and things that you're gonna need to be aware of. You're gonna need to take steps if you are in one of the states that currently has such a law. You're gonna need to make sure that you're registered. You're going to need to make sure that you budget for any amount that needs to be paid. There are private plan options so you may not necessarily be paying it to a state. You may be paying it to a carrier. Regardless, you have to have the money to pay and you need to make sure that you do in fact do it. So like any leave law it's also important to make sure that you are managing and documenting the leave that is being taken, have an understanding as far as what the accruals look like. These various different laws have different notice requirements, different record keeping requirements. So it's really important to have all of that stuff buttoned up. And understand that there are different laws in different states as Gene walked you through on the previous slide. And there are certain situations if you have employees that are working in different states or if you have remote employees, you need to understand the differences between those laws and which laws are going to apply. Generally speaking, from an employment law perspective, you would move forward with applying the law that is going to be most beneficial to the employee. This gets to be a little bit more complicated because on top of that, there's also the concern of having to understand where these payments are being made and where the benefits themselves are actually being received from. So when talking at state level activity and you can see here there is no federal paid sick leave requirement. However, there is a federal requirement that applies to federal contracts. So be aware of that. There are 20 states that have paid sick leave law, which is what we're talking about now. I'm not going to run through the entire list of all of the states with you. Understand that with a lot of these laws, employment laws in general, they oftentimes start on the coast and then we find that they slowly start to, pop up in, the middle of the country. And there are exceptions to that rule. Minnesota tends to be pretty early in the game, Illinois, Colorado. But it's important to know where do you have your employees and is there a law that needs to be considered? Above and beyond just state law, there are plenty of localities that have their own ordinances that have paid sick leave requirements, many of which are very similar to state requirements that are out there. But if you were to look at say Minnesota, Minnesota in the Twin Cities area alone, St. Paul, Bloomington, all three have their own paid sick leave laws. So in addition to the state law, you need to understand, okay, what am I looking at here? Where are my employees? Are my employees bouncing around from location to location? Those are all things that need to be considered. There are states that also have industry specific requirements, which we're not going to get into today, again primarily because of time constraints. But this is stuff that isn't going away. And I'm not trying to make the argument that it should, but it is becoming more and more complicated the more and more of these that we see. And it's really important to make sure that you keep yourself educated as to what your obligations as employers or managers, supervisors, so on and so forth with making sure that whatever company you're supporting is going to be in compliant with these items. Sticking with the paid sick leave topic for a moment, there are some recent changes that have taken place. So you can see on the slide here, California, they've expanded their coverage and definition of who is covered to include victims of crime in Connecticut. They have lowered their threshold for employer coverage. So what was 25 employees to be a covered entity within the state has now been dropped down to 11 or more employees. That's pretty important and that's pretty significant because we're getting down into increasingly smaller sized companies where this can have a greater impact. And Oregon has added blood donation as an eligible reason for sick time. These changes pop up fairly regularly. I just read recently Washington, published a permanent rule recently, that had to do with amendments that they had made to their law. And what is also important to understand, and this tends to get itself sifted out eventually, but when these laws are written and passed, there's oftentimes situations in which the law itself or the ordinance of the locality maybe doesn't specifically address every single situation. And usually there's follow-up guidance that would come out that would address those types of things. But understand that you very well may run into a situation in which there isn't a clear black and white answer as far as what you need to do and what your obligations are. Localities again, Pittsburgh just had a change in their accrual level if I remember correctly. So depending upon where you are and depending upon where your employees are working, it's really, really important to keep tabs on this. From an obligation perspective, keep tabs and follow provisions. Again, make sure that you know where your employees are going. Going back to Minneapolis when I was working up there for a period of time, I remember there was question of, well, what do we do if an employee is like a driver and they drive through Minneapolis? At the time when the, ordinance was first put in place, there wasn't clear direction on that. Larger point being, again, you need to understand where your employees are, what are they doing, are they or are they not covered, understand what the accrual responsibilities and what the options are to you or to your company as a whole. Is it an accrual only? Is there accrual with the option for allotment carryover? All of these different ordinances laws have slightly different makeups as far as how these laws and your policies can be created. Ensure proper record keeping. And one of the requests that we do get fairly regularly, I touched on policy very, very briefly, but it's not uncommon for a client to want one policy that's going to cover all of the states and localities in which they have employees. And it's a legit want. Particularly if you have employees in six different states that have such requirements in various different states. If you get into California alone, they have a number of localities that have their own paid sick leave laws. If you're only looking at one or two, it can be relatively realistic or easy to maintain one policy. But generally speaking, it's probably going to be in the company's best interest to have separate policies for each and every one of those, despite the fact that I'm recognizing fully that it means you're going to have various different policies that are going to be very, very similar to one another. But when you start to look at each law and each ordinance and you see that they may have slightly different eligibility thresholds, usage requirements, if you try to create one policy, you end up with a policy that goes on from here to Yaya. And frankly, it also means that it can be harder to maintain and make sure that it is updated moving forward. Yeah, the biggest takeaway Jared I see with that you're going to talk about some of the other employment laws which have gone local is it's a local thing. Right now speaking to you from Texas. I'm at a client that's a trucking client. They have 200 truckers, drivers driving all around the country. Can you imagine figuring out those rules depending on where they live and where they're going through? Guys, keep in mind, if you're not paying attention to this stuff, I don't want to panic here, it's just me talking, not necessarily paychecks. This kind of stuff is equivalent to wage theft if you don't comply. You know, if you are not giving compensation or complying with, like paid sick leave laws as an example, it is, you know, not only you subject to the potential local and state fines penalties, whatever, but it is definitely not the PR that you want to be, receiving. If people start, you know, you're messaging about this on social media as well. So super important to stay compliant and up to speed. All right, you've got a poll question on your screen as well. So please, take a moment to answer. Jared, let me hand it back to you because, worker classification rules also are, they changed and now they've changed back again. If you can tell us what's going on. Wonderful. Can do. So worker classification aka employee versus independent contractor. You may hear YouTube versus ten ninety nine. This is and has been a rather complex topic and, not to turn this into a political conversation, that's not my intention at all, but it has been largely a pendulum swinging back and forth depending upon which administration is in charge. Right? So we had a period of time where we had an administration that wanna make it harder to classify as independent contractors, swung back to wanting to make it easier to classify employees. We're not gonna get into all of that, but it's important to understand that this is a moving target to a large degree. From 2008 on, there's been a number of different opinion letters, fact sheets, guidance that's been put out, field assistance. So ultimately where we are right now is that there's indication from the current administration to, in essence, replace the 2024 rule that was put in place. And it's possible that there's gonna be a recession before that rule can even be proposed, so the new rule. So ultimately, we're in a place right now and you can see it on the screen, fact sheet 13. This is the law of the land currently. And if you go to this fact sheet, you can see on the slide there is a link to it. There's actually a little, the first thing you see is an explanation as to some of the timeline where we've been and ultimately where we're trying or not we're trying, but where things very well may end up. So also similar to what we discussed with the paid family leave and the paid sick time, it's important to understand that there are differences between what is and is not an independent contractor at the federal level versus what various different states and localities may have in place. So the tests can vary. The tests can vary frankly based on agencies. The IRS versus the state jurisdiction and even within a state, a work comp definition of an employee versus an independent contractor may be a little bit different than what an unemployment agency would have. It's really important to make sure that you understand here again, where are your employees and what is the law of the land within the state and locality in which they are working in. And I can tell you what oftentimes in practice I've seen trigger an audit is independent contractors no longer working for company XYZ. They file an unemployment claim. The unemployment agency does not have that worker on the employee wage detail report, that needs to be filed on a quarterly basis, which then leads to an investigation or audit into, okay, well, this person's filing for unemployment saying that they were an employee but you haven't filed anything on your wage detail report indicating that they are employees. So have a strong understanding of this. This is also a situation in which depending upon your current situation, if there's reason to believe that you might have some issues on your hand and significant issues, it may be in your best interest to work through an analysis and an audit under the blanket of attorney client privilege. And we don't run into that often but there are times in which we need to refer clients to their attorney and oftentimes clients don't like hearing that attorneys have an expense associated with them. Not to suggest that they're not worth every penny, of course, but, having that attorney client privilege and having, an attorney work with you on those types of situations oftentimes can be beneficial if you know that there is a problem. But that's gonna be very, very circumstantial. Some of the risks with misclassification, penalties, fines. Gene touched on this, with paid sick time, back wages. If you're not paying someone based on your pay cycle and then they're arguably an employee that can lead to wage theft and wage and hour issues. Benefits owed, workers could file lawsuits against the organization, can have fairly significant company reputational damage implications and there are tax liability issues as well. And not to go off on a tangent, but quick example, what we do see from time to time is a company that has more or less built their business, designed their business around utilization of independent contractors. I can think of a client I worked with. I knew that they were expected to grow. They were a new business, and I knew that they were growing, but the number of employees that they had wasn't increasing. I had to go visit with them. I popped on a plane, went down to Florida, which is where they were. And I got down there and saw that they had like 70 people working in a warehouse. To which I asked, hey, who are all these folks? And they were all people that they had hired, and they were working on an assembly line and they were paying them as independent contractors. So not only can there be risks such as what you see on the screen right now, but it can go far beyond that because this was now a large mass of workers that they arguably needed to convert to employees and each one of those employees was going to have more in the way of expenses than what the company had actually budgeted for as a part of the creation and design of their business. How does this pertain to the OBBA, One Big Beautiful Bill Act? The main item to be aware of here is going to have to do in addition to everything we just discussed on the previous screen. The OBBBA has the no tax on overtime provision which necessitates or requires that employers keep track of overtime. And when you have an independent contractor, you theoretically are not recording the hours that they are working and you're not keeping track of overtime. So as a result, that can also create reporting issues and it creates risk of W2 issues. Another area where this has popped up and this starts to get into our next topic of exempt versus non exempt, but seeing an example of an inside sales rep that was paid as an independent contractor, there is a retail establishment exemption that can allow for certain inside sales reps to be exempt. The person arguably didn't fit that criteria. So suddenly they have this inside sales rep that hasn't been paid appropriately as an employee, hasn't been paid overtime and now the employer was in the position in which they didn't have the ability to report that information as what will become a responsibility. So when we talk about what clients or businesses should do, it's important to work through an audit. We help clients with this fairly regularly. If there's a reason for concern on your end, I encourage you get with your HR professional. If you're not currently applying, obviously we'd love to help you out. But here again the audit, it may be beneficial and best for you to work through this with counsel if there is a mass concern of misclassification. But this is a step that will need to take place. Review all the workers that you have classified as independent contractors to make sure that they are in fact independent contractors. Consider the criteria, applicable laws, where are they, state law, local law. That's all stuff that needs to be included in that audit. And there needs to be a job analysis. And that job analysis is going to basically be looking at the worker, the responsibilities of that worker, and it's important that you understand the relationship that the company has with that worker so that you can work through a process of evaluating whether or not the worker is appropriately classified. And this starts to get into things. What kind of control does the company have over the worker? Is the relationship indefinite? What kind of financial reliance is there on behalf of the worker, the independent contractor on the company? Are you the only company that the independent contractor is working for and they've worked for you for six years working full time, well, those are certain types of things that can create optically anyways, the existence of an employment relationship opposed to an independent contractor relationship. And again, the moral of the story here with all of what we're discussing today is stay on top of this stuff, stay informed, monitor what's going on at the federal level from a rulemaking perspective, Understand where you have employees and what's going on in each one of those states. And again, if you do have concern, utilize whatever resources you have available to you, whether that's us, that's CPA, whoever it may be. All right, sounds good. All right, Chad, we have a limited amount of time. So hopefully you can run through the overtime stuff as best and efficiently as possible. Go for it. Absolutely. Similar exempt versus non exempt or the overtime rule pendulum of sorts and that we've seen a lot of movement as it pertains to the salary basis test. There hasn't been much change at the federal level and I stress federal level. We're still looking at that $6.84 per week. There are certain requirements that go along with that as far as how the six eighty four would need to be paid and guaranteed for the highly compensated employee threshold for that exemption 107,432 is still going to be the norm. And it's important to understand here and remember that this is only for the salary basis test piece of what makes an employee exempt or non exempt. There's still the duties test and what the employee does and what kind of supervision they have over people or how closely they're supervised is also going to be factors that will need to be considered in determining whether or not a position is exempt or non exempt. So not a lot of movement there, frankly, from a salary basis perspective. Understand, as has been the theme with all of the employment stuff that we've discussed, different states may have different requirements. They may have a different salary threshold or incorporation of their minimum wage and determining what that salary requirement may be. So keep tabs on that, keep tabs on where your employees are. And as far as the no tax on overtime provision that was discussed earlier, The main takeaway here is going to be that the overtime and what is reportable and exemptable is only going to be the federal recognized overtime. So, certain states don't necessarily recognize that same no tax on overtime, and it's only going to be work that is exempted from overtime at the federal level. It's a personal tax deduction. It's an above the line tax deduction. So try to avoid getting the two confused or conflated with one another. All right, Jared, that is just great stuff. Thank you very much. I'm gonna bring in Zach now. Zach is our retirement plan specialist and let's not forget everybody that, you know, Urban Health Insurance, the survey after survey says how important retirement options are for their employees. And Zach is gonna talk to us a little bit about updates in that area. Zach, me turn it over to you and tell us what we need to know. Great, Gene, thank you so much. The first thing that I want to talk about is Secure two point zero. It's hard to believe, you and I, I think have been talking about Secure two point zero since about twenty two, twenty twenty three. Well, is the last big headline provision of Secure two point zero is going to be sneaking up on us. It's gonna be sneaking up on us throughout 2026. It's gonna be going live in 2027. And boy, it's a doozy of a provision. What we have here is the transition of the historically available savers credit. What we all know and love that, has been available for years. It's kind of targeted some lower and middle income taxpayers. They get, some dollars back as a tax credit. Well, not for much longer. This is something that is going to be switching to be a a basically a four zero one k credit. And the the interesting part about this, Jane, and for everybody on the line is we don't know just yet what that's going to look like. There is no infrastructure that supports getting the money from Uncle Sam's hands into the hands of an individual four zero one k or other retirement plan. We don't know how it's going to get there, but we expect that employers are gonna play a role in that. So there are a few things that employers should start thinking about today. This is going to impact you probably, you can probably expect questions from your employees. I think, if there are employees in your organization who maybe depend on that tax credit, it might be good to start socializing this a little bit early. I think there's the potential for, employers to need to help. You know, not every employee is going to know where their four zero one ks is, how they want those dollars to be invested, and we all know you are the first stop when it comes to answering benefits questions. So we'll need to watch carefully how things unfold. As a business, as a business counselor right now, start preparing the HR and the benefits team to answer those questions from the employees when they do come. I would also say monitor implementation. There will be guidance on this. Myself, my four zero one k team here at Paychex, we are anxiously awaiting that. You know, the other thing we could see is a little bit of a delay. That's happened before, notoriously with the next thing we're going to talk about. And, that is the Roth catch up provision. But first, I think we've got, our I believe our final poll question. Take a minute out to answer that question and it will be popping up on the side and Zach keep going. Okay. The roth catch up provision. This we've talked about a lot. You know, it is something that today is live. As I mentioned, this was delayed because industry just wasn't in a position to make it work. What is the Rothification of catch ups? Basically effective just two short weeks ago, individuals who make over $150,000 a year in Social Security wages in the prior year need to make their catch up contribution. That's the age 50 catch up that needs to be made on a Roth basis. What this basically is, is a pay for for Secure two point zero. Those tax dollars are going to be funding everything that Secure two point zero does. So right now, I think business owners and business counselors should take a look at who's going to be affected by this. Now's a great time to make sure that plan offers Roth contributions, because if there are folks who are planning to utilize that catch up, you know, the plan needs to offer Roth in order for that to happen. That's a conversation to have now, not at the end of the year because it might necessitate a plan document amendment. From a retirement standpoint, one last item I think we should probably touch on, and that is mandatory workplace retirement programs. I don't know, Gene, if you have anything you want to add about that before I dive in? No, keep talking. Okay. In the interest of time, we'll keep it quick. Workplace retirement mandates are growing. We've talked about this many times. You know, like Jared said, this is a state level initiative, and it does. It starts at the coasts and it works its way towards the middle of the country. I think 16 states right now have fully active mandated retirement programs. Many states Minnesota, Hawaii, Washington, for now, but not for much longer. My home state of New York and many others, many states probably close to 50% at this point are either contemplating, considering legislation, or are in the early phases of conceiving how our retirement mandate is going to work. Spoiler alert, most of them work the same way. And what that really boils down to is a state sponsored IRA plan. It's important to know as somebody who works with businesses out there, that a business has two options. You know, number one is that state IRA. Number two option is a more traditional something like a four zero one k. And I think especially with the tax credits that are still in place, to secure two point o, What we see at Paychex is a lot of employers choose that four zero one k route. It's a more flexible plan. It's a richer plan. It draws employees in. And, honestly, it can be the same or substantially similar in terms of costs, sometimes even cheaper. So if nothing else, know that you should take a look. What does your estate require? What will your estate require? And keep in mind that it doesn't need to be the state plan. It can be that traditional four zero one ks or other retirement vehicle that will satisfy that employer mandate. Now, in the brief time that remains to us, I want to, to shift gears. You know, gang, there's this thing called AI. I know not many people have heard about it. It hasn't been in the news that much, but, it's affecting all of us whether we know it or not. So I want to spare a few moments just to talk a little bit about what's happening at the at the federal and the state level, very broadly. You know, there's not much federal legislation that is governing AI yet. I think I've heard some rumblings that things are going to be introduced maybe as soon as this month. Paychex will be watching that carefully. Hopefully, I'll have the chance to come back and speak to you all about what's happening in AI at the federal level. But for right now, what we see mostly is agency specific, regulations. The FCC banning AI generated voices and robocalls, things like that. There was a big executive order, just last month. You know, what this does, what it doesn't do, I think is important to understand. It does not preempt state laws, at least not in a blanket fashion. There was a piece of legislation that did install a ten year moratorium on state level AI laws that did not come to pass. The executive order does not, and arguably cannot do that. But what the executive order does do is set up the infrastructure for the executive branch to kind of prosecute a campaign against, quote unquote, onerous state AI laws. So that's something to watch closely, because I think it's fair to say that certain states are probably already in the crosshairs of the executive branch without getting too political. In terms of what state AI laws are regulating, you know, you can see the list here. I think it's safe to say that state laws are generally some of the common sense stuff that we see here, and they're also targeting what I would call frontier AI models. In other words, the biggest of the big, usually defined as a as a function of how many dollars, hundreds of millions of dollars are spent in development, how many operations that AI is conducting, and usually those numbers are so large that they need to be expressed in scientific notation. So with that, I would say every employer out there should keep AI on your radar. Even if you don't use it, you probably are actually still using it. You need to probably budget for compliance and investments in AI governance and know that those things are out there. Stay tuned for more because 2026 is likely to be a wild year. So with that, Gene, I think I'm going to turn it back over to you and Yeah, thank I'll you joining us Zach, you're the one guy I know that makes retirement plans and AI fun to listen to. Thank you very much for taking a dry topic and making it entertaining. All of you guys, this our final poll of the day. Let me ask you to please pay special attention to it. If you've taken nothing away from this webinar, it's that things aren't complicated. If you are doing a lot of this stuff in house or by yourself, particularly if you have a lot of interstate employees, work, remote workers, probably not a great idea. It's a good time to get outside help. Paychecks can certainly help you with a lot of these things. So if you'd like to at least find out what they can do for you and help you in your business to take some of the pressure off of running your business, you should absolutely answer yes to this question and have the ability to get some help and consulting from them. In addition, if you are looking for additional resources that you can turn to, there are a bunch of them also available from Paychex. Not only pre tax guides that can help you, but also works articles to help you on these topics as well. Certain website pages that you can see here. And then of course, webinars and podcasts, including the paychecks thrive podcast, which I host and we produce every week of the month. That is all a bunch of resources that talks about and digs much deeper into the issues that you've just seen on this webinar. So without further ado, I just want to thank you and I certainly want to thank our panelists, Bill and Jared, Zach, you guys are fantastic. I appreciate all the great information. I hope you, have received really good information to help you run your business and navigating this very complex regulatory landscape. Again, if you need any help, visit us at paycheex.com. That's www.paycheex.com. Thanks everybody for watching. We will see you hopefully at some other webinar or on our podcast in the future. Take care.