Name: Year-End Compliance Countdown: Your 2027 Readiness Plan
Uploaded: 2026-10-21T19:15:40.485Z
Duration: 54 min 29 s
Description: Year-End Compliance Countdown: Your 2027 Readiness Plan

Transcript for "Year-End Compliance Countdown: Your 2027 Readiness Plan": Hello, everyone, and welcome to today's event, year end compliance countdown, your 2027 readiness plan. My name is Robert Parsons. I manage brand and content here at Paychex, and I'll be moderating this webinar. Now as year round approaches, employers have a lot on their plates, from payroll and tax reporting deadlines to evolving compliance requirements. That's why today's discussion is so timely. We'll cover the key updates employers should have on their radar and share practical steps you can take now to help ensure a smoother, more compliant start to 2027. Now before we dive in, I just wanna cover a few, quick housekeeping items. At the right side of your console here, you'll find the docs column, and that'll have related resources, including a printable copy of today's slide deck. You'll also see the q and a column where you can type in your questions. Now we have a few team members in the back end who are helping to provide answers privately. We'll also hope to take some q and a at the end of today's event, though I can't guarantee we'll have time for that, but we'll do our best. Either way, we like to get these questions. They really help us create future resources like this to strengthen your business. Now occasionally, you may also see an audience poll come up. When a poll opens, a blue alert card will briefly appear at the lower left of your console. So go ahead and click on it or open the poll column at the right. It'll be marked with a red dot, and you can view the poll. And there are no wrong answers. Just select your response, click submit, and you'll receive a confirmation message. And as always, this presentation does not constitute legal advice. It's for informational purposes only. And now I'd like to introduce today's speakers. We have two Paychex experts who'll be presenting today. So please welcome Heather Whitney and Randy Kaufman. Heather is the risk and response team or HRRT program manager at Paychex, bringing more than eighteen years of experience supporting businesses through complex HR, compliance, and employee relations matters. She holds both the senior professional in human resources California, the CP... Or SPHR-CA, and the SHRM certified professional or the SHRM-CP certifications. Randy Kaufman is a senior compliance analyst at Paychex with almost twenty years of experience focused on payroll tax compliance. As the payroll tax compliance year end lead for nearly a decade, he coordinates enterprise wide year end initiatives with internal teams and business partners and ensures compliance with evolving agency requirements and payroll tax regulations. So to help you proactively prepare to meet your compliance obligations as year end approaches, we're gonna review several key areas where advanced planning may help you mitigate HR compliance risks. HR compliance is a complex area with many moving parts. We wanna make sure sure you are prepared. Now employment laws and regulations are on the rise, and the risk of penalties for noncompliance continue to steepen. For example, in 2026, prior time allowances for correcting technical errors to form I nine paperwork removed. So that puts businesses at risk of immediate costly penalties. So the next forty five minutes, we're gonna cover, we're gonna cover some of the payroll and year end tax reporting things that you've gotta prepare for. We're gonna talk about wage and transparency requirements. We're gonna talk about things to do to get ready for the retirement savings, benefits, and the ACA compliance. We're also gonna talk about multi state workers and employee classification. We're also gonna discuss year end best practices and 2027 compliance deadlines, like all the things you really need to get ready. We're also gonna talk some q and a at the end, if we have time. This is all really important information, and our goal is really to help you feel more comfortable and confident going into year end. With that, I wanna take a quick poll just to see where everybody's at, you know, just to get a feel for, what's going on. So please mark your response to the question on the right. You'll see the, submit button there. And what... And what what I wanna know is what aspects of your end HR compliance preparation are you most concerned about for your business? Is it payroll and wage compliance? Is it pay... Is it employee benefits? Is it those new no tax on tips and overtime provisions? Is it worker classification? We know that always trips people up. Or is it multistate employee variables? And we've got quite a few votes coming in here. It's very interesting to see. Worker classification doesn't sort of surprise me. Multistate there, but number one, payroll and wage compliance. We know at year end, that's just a a huge, huge issue. So I'd love to hear what you all think about that. You know, seeing these results from our audience, what do we think? I'm not surprised seeing that. Agreed. It's always always important this time of year. Randy, why don't you take over now and kick us off on the, the next content? Will do. Will do. Thank you. So hello, everyone. Again, my name is Randy Kaufman. I'm a payroll tax compliance analyst here at Paychex, and I'm gonna take you through, the first portion of this presentation. So first things first, right? Being prepared for the unexpected. So there are certain matters that we all know, right, that are unexpected. But then there's also the expected, right? So we all know W-2s, Right? We're all familiar with W2s. We all know those are generally due January 31. We have to provide those to employees. And we also have to file those with the Social Security Administration. Right? So understanding those practical details, it helps to set the stage for being prepared for the unexpected, which is very crucial this time of year. Right? It's it's it's very crucial. We just have to be ready for anything because as we all know, IRS, they they come up with some with some very interesting deadlines, some very interesting guidelines. So, some of the things that we might consider unpredictable, or triggered by certain events, certain events could be when you bring on a new hire or if an employee leaves the organization. So in such cases, it's it's knowing what's required, what's your window of time to meet those responsibilities, and what's the best way to prepare. So as as we mentioned, we're gonna dig deeper into a few key areas. We're gonna talk about payroll and tax compliance, including that 2025 tax bill. So we're gonna talk about pay transparency, including employee benefits. We're gonna talk staff and hiring considerations, including the ACA compliance. And again, our goal today is to help you be prepared for those critical compliance tasks. And it's just gonna make year end smooth and give you a successful start for the new year. So let's dive in. Year end payroll. Right? Let's start with payroll. Right? This is where year end errors show up first and cost the most to fix. So first things first, it may seem simple, right, but verifying your employee's information. You know, being a part of being prepared is knowing that information is accurate. So it's important to verify your employee's information. It it plays a key role in staying compliant as we close out the year. What does that really mean? Right? Well, first thing, validate your employee addresses. If you don't, that incorrect information could delay the receipt of w two forms for some of those workers. And that's just gonna create a lot of wasted time for your business with extra printing or mailing. And those employees need those forms to file their returns and hopefully get their refunds. Right? So your employees should also be reminded they need to verify those state and federal withholdings. So make sure those are still accurate for the coming new year. You also wanna review their benefits and confirm their employee eligibility and that their beneficiary info is still accurate. Okay? Review PTO balances, vacation, sick time, and, you know, again, be prepared for your employees to ask you about this. So it's good to to brush up and make sure you have all that information readily available especially this time of year. Employers, you're also gonna wanna confirm and share any of the carryover date or grace period for FSAs. You know usually sometimes that rolls over into the next year. Sometimes I believe it goes into March. I don't don't quote me on that. But again good information to have for your employees if they ask. Another key is employees that may have left your company during the year. It's still important to keep good information on file for them. Because again, they still need a w two. If they worked... If they had wages, they still need that w two. So So making sure you keep that accurate address, reliable contact information, it just reduces that chance that they need to contact you and you need to reprint or send another copy. So again, we're just talking delays, delays, delays. Right? We don't want that. Keep that accurate information on file. So with that said, let's talk a little bit more about w two's. So we want to ensure timely filing. Right? That's that's first and foremost. So once that employee information has been verified, that next step is ensuring w two's are submitted because that accurate and timely reporting that helps protect both your organization and your employees as we close out the year. So double check those w twos. Make sure they're ready to be furnished and filed by January 31. Keep in mind that January 31 date could change depending on what day it falls. I did look at the calendar, and for 2027, it is on Sunday. So So technically that due date does does shift the day but probably not the best idea to wait till the last minute to get those furnished and filed. But again that is the due date so just something to keep in mind that that due date does extend a day because of the weekend. So what are we doing here? We're double checking accuracy of Social Security Numbers. Right? You want to double check your Federal Identification Number is correct. You wanna make sure we're reporting all taxable income, right, whether that's cash or non cash benefits. And one one thing you could explore is actually setting up a secure online platform for your employees to access that pay stub and W-two information. That could be really handy to to some of your employees. Just know the IRS does have requirements, regarding employees having to consent to receive their W-2s electronically. So just something if you do go that route, you'll want to make sure you reference those guidelines before setting up any of those online platforms for your W-two and pay stub distribution. So now that we've covered the reporting part of the W-2s we're going to move into some other key areas of year end compliance and that's payroll tax reporting. Right? So we're going to look into FICA and FUTA, in which employers, you must reconcile to fill out accurately and remain compliant. So preparing your end documents required for taxes. So first thing, right, we have FICA and FUTA. So we have the Federal Insurance Contributions Act which is FICA. We have the Federal Unemployment Tax Act which is a FUTA reporting. So as you might be aware, those are federal payroll taxes. They have very distinct rates, funding purposes, and reporting rules. So they're very different. So for example, for your FUTA tax liability, if it's more than $500 in the calendar year you actually have to deposit a quarterly payment. So if your liability is $500 or less in a quarter you can just carry that over to the next quarter. So just be sure you're aware of some of those, those rules that the IRS has regarding that those that FUTA. A little bit about the Affordable Care Act requirements. So there are companies obviously that are subject to the ACA, the Affordable Care Act's employer shared responsibility provision. So you may need to prepare and distribute those ten ninety five c forms to those applicable employees. Just as an FYI there is this thing called the Paperwork Burden Reduction Act from back in 2024. It does allow employers to provide a notice on their website, instead of automatically having to send the form out to their employees. But if an employee requests it they obviously still have to provide that. So the ACA there's the forms ten ninety five C and then the ten ninety four C. So those could be needed to stay in compliance and we will get into those forms a little bit later. We also have independent contractor payments. So any qualifying independent contractor that earns more than $2,000 in a calendar year, and that's new for this year and again we'll get into that in a little bit. They need to receive a correct statement for their tax purposes and that's filed using the ten ninety nine NEC. Now in the past we've had a lot of confusion about ten ninety nine filings because they have the the ten ninety nine MISC or the M or MIS whatever you wanna call it. And then there's the new the newer ten ninety nine form called the ten ninety nine NEC. And I say newer it was 2020 when when the IRS created this. But so you may be aware but just a brief kinda distinction between the two. The MIS is for miscellaneous income. Right? So that's used to report, those various types of miscellaneous income not considered wages, salaries, or tips. So it could include rent, prizes and awards, payments to an attorney. There's a number of things it could be. So that's the the miss. Prior to 2020 when the IRS created the NEC form, it was also used to report that non employee compensation. Obviously, that has changed. Now we have the ten ninety nine NEC, which is that non employee compensation, which is what this form is obviously specifically used for. So again payments of 2,000 or more made to independent contractors, freelancers, those self employed individuals, right? Those were payments previously reported in box seven of that ten ninety nine MIST form. And again, this is new as of 2020, where they separated these out. So that's kind of the distinction there between the two. So now let's shift over and we're gonna talk about some other common year end tax forms. So fulfilling those tax obligations. I'm sure as we're all aware, right, business tax obligations, it varies by state, It could vary by business size, industry, and a number of other factors. So as an employer, it's your responsibility to fill those year end tax obligations. So you need to send employees and contractors their specific tax forms by the due dates, right? Usually it's the end of January. Some some forms have different due dates. And then submitting those tax forms to the SSA and the IRS. So a couple of those forms specifically, I think the W-2s, we're all familiar with those, right? The w three is just the the summary of all your w twos and those are submitted, the w three is submitted with the w twos to the SSA. The ten ninety nines which we just talked about, so those are the statement of income for contractors. We have the form nine forty which is filed with the IRS by businesses with one or more employees and it's used to determine that federal unemployment tax, that FUTA that we talked about earlier, which is based on, the business annual payroll. And again, that's filed annually. So that's a that's a once a year form that we have to get ready at the end of the year to be able to be... To file in January. Not to be confused with the nine forty one, this is not an annual form. This is a quarterly form, but we like to bring this up this kind of year because we don't want it to get lost in the shuffle. Right? We still have fourth quarter filing which again would be due in January so we want to make sure we don't forget about the nine forty one. And that's used to report that wage withholding for income tax as well as employee share of Social Security and Medicare taxes. So again don't want that one to get lost in the shuffle because it's not an annual form so make sure we we have that ready and prepared as well. And then to make it even more confusing we have a nine forty four form which is kind of an alternative to the nine forty one, and it's only for those authorized small businesses, by the IRS. So it it just applies to those employers with annual liability, totaling $1,000 or less. So I don't know the numbers around that, I don't know how many actual authorized small employers there are, but again if you do fall into that bucket you would only have to file the nine forty four, you would not have to file the 941s. So just important information there just in case you do fall into that category. We have the ten ninety five forms which again we kind of alluded to earlier with the Affordable Care Act. So these report health coverage right as part of that ACA and it's dependent on employer size. So if you have an average of 50 or more full time employees, you have to file that form ten ninety five C with the IRS. If you are a self insured small business, so if you're under 50, you file the ten ninety five B, right? Gotta have two forms just in case. So that reports information on individuals that were provided that minimum essential coverage. And just know these due dates do vary based on the requirement. So, again check IRS websites. I did a quick search. It looks like if you're filing out a paper it's due March 1, electronic March 31. Important note about this. Filing, furnishing late can lead to penalties. Right? So put these dates out on your calendar. You know, those informational returns like the W-2s and 1099s, they could have penalties from anywhere from $60 to 680 per return. Right? So we don't we don't wanna pay the IRS more money. So making sure we are prepared and have those forms ready is is very important. As a payroll tax compliance analyst, right, that's our job. Our job is to make sure our employers are being filed timely and accurately. Right? So we work very closely with the IRS and SSA, as well as obviously all of our state agencies to make sure we're getting these forms filed accurately. We don't want to pay any of those penalties. Very important to note those due dates. Well, now that we've talked through some of those obligations, let's talk about the 2025 tax act. Right? Otherwise known as the big beautiful bill, OBBBA, whatever we wanna call it. Right? So how does that affect some of these forms that we've been talking about? So some changes were made that do affect some of these, informational returns. So for example, the w two, I know we're all familiar with it, but there's a new box 12. You put the codes for the total amount of cash tips reported to an employer, the total amount of qualified overtime, and then box 14 is now divided into two separate fields. There's the TTOC which is the Treasury Tipped Occupation Code and then there's an other. And again, we'll get into that a little bit more later. Then we obviously have the ten ninety nine's. How are those changed? Those, again, they have specific boxes for reporting those cash tips, that TTOC code that we talked about, overtime earnings. So on the NEC form, box one is actually now subdivided into four different boxes. There's 1a for the non employee compensation, there's b for cash tips, c has that TTOC code and then d is the overtime compensation. For the miss, they have now they have box 13a which is for the cash tips, 13b for the TTOC and box 14 is now active for that qualified overtime. So again just that's how those forms kind of changed because of the Tax Act. For the nine forty at this time there's really no real design, redesign, or additions to the nine forty. But again, it's just important to understand that the no tax on tips and no tax on overtime doesn't mean earnings are tax free. Right? In most cases, the qualified tips and OT wages, they're still subject to Social Security, Medicare taxes. So employers must continue reporting them as payroll wages. The law generally just provides an income tax deduction to eligible workers. Right? And again, we'll get into that again a little bit later in one of the future slides. And then for the 941, the Form twenty twenty six had some general updates. There was an increase to the Social Security wage base limit. It went up to 184.5 for 2026 and there were some updates into the the instructions which basically just reflects the compliance with the tip reporting reporting rules. So with that being said we're going to talk a little bit more about no tax on tips and overtime. So again just to reiterate something I mentioned earlier, the employer's job here is reporting. Right? The employees, they claim the deductions on their own returns. So easiest way to think about it, right, the Schedule 1a, it gives individuals one place on their federal income tax return to calculate these four new deductions that were created by the big beautiful bill. So the resulting deductions, they reduce taxable income. Right? They're not four new payroll tax exclusions. So first one is the tip deduction. Right? No tax on tips. So workers who receive qualified tips, they may be able to deduct up to $25,000, right, of tip income for the year. The OT deduction, so the no tax on overtime. Any workers that put in those extra hours on the job, right, they may be able to deduct up to 12,500 of qualified overtime, and then that obviously bumps up to 25,000 if you're if you're married filing jointly. So, again, just some numbers there. I'm sure we're all aware of those but just to, share those again with everyone. Couple other ones here, that we'll that we'll kinda talk about a little bit is the the car loan interest deduction. So this one real quick, it's eligible to taxpayers. You may be able to deduct qualified interest on certain passenger vehicle loans up to $10,000 for the year. But again to be eligible the loan and vehicle must meet certain requirements so it's good to check those what the requirements are with the IRS. Senior deduction same type of thing. Individuals age 65 and over they may qualify for an additional deduction up to $6,000 If your spouse is also 65 that can go up to $12,000 if you file jointly. So all four of these have eligibility requirements and income based phase outs. So Eligible taxpayers may be able to claim even if they take the standard deduction rather than itemize. But again, more information on that can be found on the IRS. I think that'll be in some of our information that we forward out to everyone. One other note here, beginning with 2026, on the form w-two, employers are required to identify those those qualified tips that may qualify for the federal deduction. Those are reported, in box 12. And then, in 14 b, again, as we talked about, is that Treasury Tipped Occupation Code, that needs to be identified as well. So what's the takeaway here? Accurate tracking of tips and overtime. It's what makes your W-2s correct. Just making sure we're on top of all those changes, that's what's going to make everything correct. Additional tip related information. For employers, again, I kinda mentioned this before, not much is changing beyond the reporting. Right? The withholding, the payroll taxes stay the same. Okay? Employee qualified tip deduction, that 25,000 is effective through 2028 and it phases out above 150,000 of modified adjusted gross income. That bumps up to 300,000 for joint filers. Again, when you hear no tax on tips, don't interpret that as employers simply stop taxing tips through payroll. It's primarily that income tax deduction that an eligible worker claims on their individual tax return. Next is that, FICA, FICA tip credit. So, the big beautiful bill actually added, I believe this was last year, they added barbering, like, hair care, nail care, that beauty salon into, the the ability to use this credit. So if you are, one of those employers, make sure you look into that because it used to be... I believe it was just limited to restaurants. And I know they opened it up to, some other industries. So that's just a good note to have. And, it just also plays into a good reason and why we need to review how those tips and occupation codes are coded. Right? And you need to discuss that credit eligibility with a qualified tax advisor because you know, that accurate payroll data, it can support both reporting and the employer's evaluation of available credits. Alright. Next, we're gonna close-up this tax section with some kinda some broader, business type changes. So just for awareness, these are business tax items. So you will wanna review these with, any CPA, but thought it would be good to at least share the information here. So first thing is the Qualified Business Income Deduction or QBI. This was a more significant tax act provision for those small and pass through businesses. So for eligible taxpayers, the QBI deduction, it continues to allow a deduction up to 20% of that qualified business income. The SALT cap, so the state and local tax, like the QBI, it's primarily, an individual federal income tax issue rather than a a payroll tax change. So the current SALT limit for 2026 is $40,400 and that begins to phase out after $505,000 of income. The temporary... Yeah. The temporary increase of the SALT deduction cap is adjusted annually, through the year 2029, we're scheduled to return to 10,000 in 2030. We have the bonus depreciation. So this was a new law, that permanently restores, 100% federal bonus depreciation for those qualifying new and used business property acquired after January 2025. It allows eligible businesses to deduct the full cost in that first year rather than depreciating it over multiple years. And again, state conformity could vary on that. This is really just, again, Fed IRS specific. That qualified property, it generally just includes like depreciable assets, machinery, computers, office furniture, stuff like that. We have the Research and Development Expensing Provision. So this began with tax years starting after, 2025 as well and businesses can generally, immediately deduct that qualifying domestic research expense instead of having to spread those deductions over five years. So that was a change that happened, after that 12/31/2024. And we have the Green Energy Tax Credit changes. So the Tax Act, it significantly changed the clean energy tax landscape. Several consumer and residential incentives ended in 2025, while other business related incentives actually accelerated the expiration dates or additional eligibility restrictions. So for those businesses that are planning kind of the the clean energy investments, when property is acquired, when construction begins, when the property is placed in service, it can now be very, very, very important. But again, these are all business tax items. Review these with your CPA to be compliant. So this concludes my six... My section, for the payroll and tax compliance and the 2025 tax act. Hopefully, you found that helpful. I am now gonna pass it over to Heather. Thank you so much. Alright. Well, welcome, everyone. Today, we're gonna talk about changes to minimum wage. So I wanna point out first that we did have some midyear changes this year. As of July 1, we had changes in Alaska, Oregon, and the District Of Columbia. What I wanna point out about Oregon is that there's different regions that had increases, so please pay attention if you are in Oregon. And then Florida had an increase as of September 30. There is also going to be 19 states increasing as of 01/01/2027. So what I do wanna point out is I'm gonna list all of the different states. But when we send it out, we will send out a Paychex state compliance map that you can click on and we'll walk you through each state. So this... The states that are changing as of 01/01/2027 are Arizona, California, Colorado, Connecticut, Hawaii, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York. New York does have locals. Ohio, Rhode Island, South Dakota, Vermont, Virginia, and Washington. Alright. So next, we're gonna move on to pay transparency. So we're gonna talk about some of the states that this affects. The first is New York. So New York employers have to include wage ranges in their job postings, provide wage notices to new hires, and give written notice of any change to employee wage information and maintain those records. Employers may not prohibit employees from discussing their wages. So private employers in New York State with four or more employees must, in good faith, provide job description, job promotion, transfer opportunity postings. This requirement applies to all opportunities that will be physically performed at least in part of the state. So something to keep notice for New York, it could also include a supervisor in that state. Alright. So then Pennsylvania is up next. In Pennsylvania, you have to provide wage information to new hires and notify employees before any of the changes. At the time of hire, employers have to notify employees of time and place of payment, rate of pay, the amount of fringe benefits, or wage supplements paid to employee, a third party, or a fund for the benefit of the employee. So employers have to provide this posting in a conspicuous place at their business. And if there is a bona fide collective bargaining agreement that establishes wages and fringe benefits, employers can comply with the notice by ensuring copies of that agreement are available to the employees. However, employers may wanna note that they should provide individual notices, based on the specific pay rates to those employees. Then for taxes, employers have to notify their employees of the earned income tax credit no later than March 1 of each year. Then California. So in California, the law requires employers to provide a pay scale for a position upon request to applicants applying for a job and employee operating in the current position. This is companies with 15 or more employees also have to include the pay scale on any job posting. So one of the updates to this law is effective January 1, changes the definition of pay scale to now mean a good faith estimate of the wage range that the employer reasonably expects to pay for the position upon hire. So employers don't wanna make sure that they're updating that regularly. And then there is potential benefits of pay transparency. Really, it helps with employer retention, increased employee engagement, and enhanced recruiting capabilities. Alright. So next, we're gonna talk about retirement plan. So in terms of retirement plans, you wanna make sure that you have the current tax credit applies to low and middle income participants tax returns. New in 2027 is that federal matching contributions deposited directly into an IRA or retirement plan account. So we'll touch on this a little deeper on the next slide. For the mandated workplace retirement programs, there's currently 17 states that have programs that are active, and we have three that are now pending. The three that are currently pending are Hawaii, Utah, and Washington. The states that already have mandated retirement programs are California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, which is a nonprofit businesses only, Minnesota, Missouri is currently voluntary, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, and Virginia. And as we discussed on the minimum wage, we will also be sending out the deck with a state mandated retirement program online hub. So you can go through and make sure that you're up to date on those as well. Alright. So the next item is the mandatory Roth catch up. So for participants who earned a 150,000 in Social Security wages in the prior year, they must make Roth catch up deferrals. There's no catch up contribution if the plan does not have Roth. So really, when it comes to the Roth, that is the post tax deduction, not the pretax. So if you have a four zero one k plan, you can work through your partner to ensure that you have that. Alright. So then next, we're gonna talk about preparing for annual enrollment. So when we talk about annual enrollment, you always wanna prepare for the increases. And this year, the premiums are rising an average of 9%. That's what's anticipated for employer sponsored plans. This is one of the highest increases in the past decade. Under the Affordable Care Act marketplace, plans are anticipated to rise a medium of 15%. So we want you to be aware this is what your team could be facing. This is a good time to work with your health insurance broker, whether that be through Paychex or outside, and ensure that you're looking through all the different options for annual enrollment, whether that be, you know, reduction to your co pay or increasing it, increasing deductibles, or any coinsurance. So really important to make sure that you also have all of the information on what changes are coming to your insurance plans, and you communicate that to employees and schedule meetings with them. You also wanna make sure that you talk about the flexible spending account, that employees are aware what it's refreshing to for the next year, as well as dependent care expenses. And then the biggest one is to really make sure that your employees understand the changes, the requirements, and the deadlines. Gather your payroll records. Your workers' compensation policy mirrors the calendar year. So you may wanna work with that to look through and make sure that you have everything set up. So as you're preparing for annual enrollment, it's important to take time to review your ACA requirements. We're gonna talk about that on the next slide. In terms of ACA, the first piece we're gonna talk about is the employer shared responsibility. So we call this the ESR. Under which company's employing an average of 50 employees. You really wanna make sure that your plan is affordable. So when we're gonna talk about state specifics on that, it's important to note that California has a filing due date of the January 15 for 2027. Sorry. Non California is 01/15/2027. California is 01/31/2027. So states with ACA requirements are California, Massachusetts, Rhode Island, and District of Columbia. Alright. So next, we're gonna move to elevating total rewards. So when we talk about total rewards, you wanna think about your year end bonuses. And this is a big thing that if you're on HR services, you would talk through which to your HR professional. You wanna see if your bonus is discretionary or nondiscretionary. You wanna look through and see what you've done in past years. What is your bonus outline, what... Do you have a compensation plan? Work with your payroll provider to issue those checks, make sure they're a separate line or that they're in the current check, and then make sure that you're considering overtime and rates of pay for anything owed to the employee receiving the bonus. There's also the wage and hour updates. So if your state was listed or you have a local minimum wage, you wanna make sure that it's updated to reflect the applicable employees pay based on the new year. In addition, review your obligations under applicable state and local laws concerning other wage and hour matters. This is really critical in ensuring that your business stays compliant. Then the last piece is that you wanna check the wage based limits. These reset in the new year. This has to do with the taxes. So for the upcoming year, company should be budgeting that those reset as of January 1. So you're going to pay more taxes until you hit those limits, and the same can be said for employees. So make sure that you're aware and that you have that all planned out for the new year. Alright. So then in terms of compensation within year end payroll, we touched on a little bit of those bonus runs, HSA, third party sick pay. We also have what we call personal use of company cards, PUC, group term life insurance, and check your benefit accruals as well to make sure that all rollovers are set for the new year. Review deduction limits and fringe fringe benefits. Alright. So up next, we're gonna talk about multistate remote workers. This is a really big deal. If you have employees that are working in other states, you have to consider the payroll impacts. So you need to make sure if they're in another state that you create tax withholding registration, and there's filing obligations for those states. Not to mention, there's also state specific rules. So labor laws can dictate minimum wage, overtime, and paid leave requirements. Depending on where the employee is, those rules could be more beneficial to the employee in other states. So you wanna make sure you're aware of those. And that's where Paychex can help with an HR professional. They can talk through that state and make sure you're set up. You also wanna make sure that you have your w twos correctly and separate wages earned in different states. And also pay attention to those local tax jurisdictions. Certain cities and local entities like New York City, Ohio, and Pennsylvania require separate local tax registrations and withholdings. Alright. So one of the biggest areas of risk for employers is having your worker classified wrong. So, really, you wanna make sure that they're either an employee or an independent contractor. And if you misclassify someone as an independent contractor, you could trigger some really big audits, back taxes, penalties, and you could even hear from the state labor boards. So with Paychex, if you're on the HR services, we will go through a questionnaire with you to make sure that the workers classified either as an employee or independent contractor properly because some states do have their own more strict requirements for that. The next piece of that is once you determine whether they're an employee or an independent contractor, if they're an employee and you have them as exempt, there is some risk for that as well if they're not supposed to be exempt. You could have to pay overtime. You could have to pay meal period penalties, rest period penalties. There's a lot of different things that apply on that. So you really wanna make sure that you have them classified properly. And, again, that's another thing that Paychex can work through with you. There's a questionnaire we go through, and we'll give you a recommendation on whether they should be exempt or nonexempt. So if you're not on HR services, this is a great model to help you through that. Alright. So then next, we're gonna talk about year end readiness. So how do you best prepare for the year end? So first thing you wanna do is create a training calendar for the new year. You're gonna consider the calendar required training for employees and managers for things like harassment, include safety practices, DEI training, hiring practices, leadership, and delegation. You might also wanna schedule some time to update managers on staff protocols and ensure that you have continued compliance with OSHA, which is the Occupational Safety and Health Administration, and the CDC, the Center for Disease Control Prevention, and as well as any local guidance. Then up next, you wanna review your employee time off policies. This is a big one. If you have a self-service portal, remind your employees to log in there and look at their PTO, vacation, discretionary holiday, sick, and paid time off, especially if you have a use it or lose it. There are some states that don't allow use it or lose it. So if that's the case, you wanna be aware of the caps and the accrual carryover requirements for those states and localities. There are places in California where there's a different sick pay in every city, so please make sure that you're aware and that you're looking at those and that they're on your pay stubs and the balances are reflecting correctly. Alright. Up next then is creating a business continuity plan. So, hopefully, you never have to go through this, but if something does come up, a business constitute con... Business continuity plan will help if your business operations are interrupted by an unexpected event. Because if you don't have a plan in place, what are you gonna do if there's a natural disaster, any type of health care emergency, severe weather? A BCP is really that backup for what do we do in those worst case scenarios to make sure that you and your business are prepared. Up next then, we have your employee handbook. So this is something that if you come on to Paychex, we have through 06:50 where you can do an annual review of your handbook. We let you know as regular as anytime policies are updated. There's also your year end HR checklist. So you wanna make sure you're doing this on an ongoing basis, that your policies are being updated, and really that you're reviewing any remote or hybrid work policies that you've had in place, and just make sure that you're looking over your policies for the new year. Alright. Then next is performance appraisals. So the end of the year is a great time to look at your employee performance. You can recognize those achievements, discuss areas for growth, use performance reviews to align on your expectations, communicate any changes for the new year, and establish development goals to really ensure that employees understand how their contribution to your company supports the broader business objective. These conversations help create clarity, accountability, and engagement, setting the year off on a great foot. Alright. So we've talked a little bit about we're here to help. Paychex is really here to help you through the process. So we're going to send out a copy of this presentation afterwards, bookmark all of our URLs for things like quarter end and year end, Download the year end documents, like payroll and HR checklist, and access the key dates to make sure that you are prepared for the upcoming year. Check your data, your wages, tax, and benefits to ensure accuracy. Run employee listings, and schedule any special bonus payrolls for the end of the year. Manage important tax information and stay updated on what you... Needs your attention with your HR compliance calendar. Alright. So getting into those specific dates for December, you're gonna wanna notify employees of benefits and compensation changes that will start on January 1, so there's no surprises there. Remind employees that they need to consent for electronic w two so that we get those out and we get them out to the right place. You'll also wanna do for January, make sure that you're looking through that list of several states. Look at the minimum wage increases. Is there a minimum salary increase? Confirm the rates are correct for that first payroll of the year. Then anything unpaid in quarter four could be collected from your bank account on January 15, so make sure that you're aware of that. In terms of February and March, February 1, we talked about this earlier. It is the deadline that w twos have to be mailed to employees as well as the ACA ten ninety five forms are due in California. For non California, it's March 1. Alright. So we have covered a lot of information today, and we really appreciate you being here. We've explored essential year end HR priorities to support workforce readiness, compliance, employee development, and organizational continuity, implementations on if you get things wrong, tips on how to streamline tasks and stay in regulatory compliance, upcoming compliance tasks and deadlines, and just remember, you don't have to go at it alone. Bear in mind, there's some additional compliance responsibilities by industry. So please be sure you verify what's needed for your specific business. Paychex HR professionals have industry expertise to help you make your business prepared no matter what the nuances of your fields are. So thank you again, and I'm going to go ahead and pass back over to Rob Thank you. So just a quick poll is gonna be coming up about the scalable suite of HR solutions, from... And dedicated guidance from an HR professional we can do to help you confidently tackle your current and future HR challenges at every stage of your business. Now if you already have an HR professional, I recommend you talk to them. As we heard today, there's a ton of ground to cover. There's a lot of things to think about. There's a lot to be prepared for. If you don't have an HR professional, go ahead and say yes to this poll. Go ahead and speak to an expert about what an HR professional can do for your business and help work you through all of these various issues. Now I know we're just a little bit over, but I did wanna get some time for just a couple questions if if... Heather and Randy, if you don't mind and if, you know, the audience doesn't mind. First of all, Randy, this this is about the ten ninety nine threshold. I'm I'm aware of the ten ninety nine misc, the NEC, But what does it really mean that threshold changing from 600 to 2,000? What does that mean for the business owner? Yeah. Yeah. Thanks, Robert. So... Yeah. Any... Those payments starting in January 2026 that the business generally has to issue on those forms for a contractor. They don't have to do it until it reaches 2,000. So what does it really mean? It's really a... It it might reduce the number of $10.90 nines that you actually have to issue. Right? It doesn't make payments below 2,000 tax free. Right? Businesses should still track all contractor payments, make sure everything's accurate, confirm whether, there's another reporting rule or exception applies. So really this is like a paperwork relief, for the payer. It's it's not a tax break, for the person getting paid. So starting this year, it's 2,000 and it's actually gonna raise every year with inflation. So this is really just a new starting point. It was 600, now it's 2,000. Who knows what it'll be next year? So just something to keep in mind going forward. Very good. Love a little paperwork relief there. Heather, you talked a little bit about misclassification, how important that is. I feel like with everything on year end, that's not necessarily something that that that I'm thinking about. So how do I know if an employee is misclassified? Heck, is there some easy signs that I should be looking for just so I can cover off on that checkpoint? I really wish that I could give you an easy answer on, hey. This employee should be nonexempt. This employee should be exempt. I mean, there are certain role titles that you could look at, but, really, you need to do that full analysis. So you're taking the job duties. You're looking at what exemption it would fall under, how it could be exempt. And, really, that's something that if you're on HR services, if you're not, I recommend because we have a really great team that can work you through a questionnaire, and we can make sure that we're giving you a recommendation because that's really a piece that you need consultation on. I can't just tell you, hey, Robert. I see your title. Looks like you should be nonexempt. I really need to know more about what you do on a day to day. So I think the best advice we could give is if you're not with an HR company, I would highly recommend something like HR services where we can walk you through this process and make sure that your employees are classified properly. As a former HR business partner, I have seen many clients where there were misclassifications, and we were able to work through that and give them best recommendations to put their business on track. And I've seen the costs. It's not something you wanna deal with. So always good to be prepared. Excellent. Thank you. I think either one of you might be able to answer this next question. We had quite a few questions come in around the different state issues, how the federal government's kicking a lot of inform... Compliance back to the states. Heather, at one point, you ran off all the state, minimum wage changes. Randy, you were talking about some different tax implications. How do how do our audience... How do they keep track of all that state by state compliance? Yeah. I mean, I I can take that. I mean, this is essentially part of my job. Right? My job is is being in... Making sure we're in compliance with all these different states with the IRS. So obviously, compliance becomes way more complicated when you have employees working in multiple states. So, you know, really one way business... Because businesses can stay on top of it is just by using those compliance resources. Right? Making it regular practice to review those requirements in every state where they have employees. I think Heather mentioned it earlier. We have a interactive state map which can kind of help you guide you through, some of the requirements by state. You know, especially these days with remote employees and and work from home, it's it's very important. So, you know, staying proactive, reviewing those requirements, throughout the year, it it really can help you identify those changes become... Before it becomes an issue, at year end. So, again, I think the the folks here will get a lot of that information shared with them after this. So, utilizing that, I think, should be a a a good practice. Yep. And if you have a lot of states, again, HR services is a really great tool because we can work that through. And when you have an HR professional, they can talk through the different nuances of the states to make sure that you're prepared and as well that your handbook's updated because different states have different requirements on handbook policies as well. And there's just so much that I don't think one business owner could know it all. So it's really helpful to have a partner like Paychex to make sure that you have everything you need and that you're prepared because, honestly, it's it's a lot. So True that. Well, thank you, Heather. Thank you, Randy. That was just so much great information and great segue. Randy, great segue to all the resources we have available. We'll be sending a follow-up email so you'll be getting access to this console again. You'll see in the docs column, there's that state by state interactive compliance map. There's that year end payroll checklist. There's your payroll calendar, your compliance calendar. All of these super helpful as well as the printed PDF of the deck. And, also, I I just wanted to note, as Heather said, you can talk to our team if you wanna talk about how... What an HR expert can do for you and your business. We know every business is different. Every challenge is different. There's nothing like having that HR expert in your corner who understands what you're going through and can give you real advice versus just things that you find on the internets. Also, we'd love to invite you to sign up for a twenty minute demo webinar. We'll be hosting next Wednesday on AI powered tools that can help you build your own employee handbook, cover off all your... All those states. You'll see how a handbook is built right on screen. So just click the link in the docs column to register for that as well. Also, if you haven't completed the brief survey that launched previously, we encourage you to complete that now before we close. We really appreciate your feedback. Helps us improve future resources like this. Once again, we'll be setting up that follow-up email within the next business day or so so you'll be able to access all of these resources. So once again, Heather, Randy, thank you so much. You covered so much ground. It was really great. Thank you again to our audience for joining us for your year end compliance countdown. We really appreciate you investing your time with us. Thank you so much.