Recent Employment Laws

Paid Medical Leave Act

Beginning March 29, 2019, employers with 50 or more employees must accrue for each eligible employee one hour of sick time for every 35 hours worked (up to 40 hours per benefit year).  In determining the number of employees, full or part-time status is not taken into consideration or how many hours an employee works.  An eligible employee does not include any of the following:

  • An individual whose primary work location is not in this state
  • An individual who is less than 20 years of age and is receiving a training hourly wage or is less than 18 and is receiving 85% of the general minimum wage
  • An individual employed by an employer for 25 weeks or fewer in a calendar year for a job scheduled for 25 weeks or fewer
  • An individual who worked, on average, fewer than 25 hours per week during the immediately preceding calendar year

Employees can carry over up to 40 hours of unused accrued paid medical leave from one year to the next but employers do not have to allow employees to use more than 40 hours in a single year.

As an alternative to accruing, an employer may provide at least 40 hours of paid medical leave to an eligible employee at the beginning of a benefit year.  For eligible employees hired during a benefit year, an employer may prorate paid medical leave provided.  As defined in the bill, paid leave includes but is not limited to, paid vacation days, paid personal days, and paid time off.

Employees can use this time for their own health needs as well as their covered family member’s health needs.  This time may also be used for absences pertaining to domestic violence or sexual assault.  Meetings at the employee’s child’s school or place of care related to the child’s health, disability, domestic violence, or sexual assault are covered under this Act as well.

An eligible employee must comply with his or her employer’s usual notice, procedural, and documentation requirements for requesting leave.  The employer must give an eligible employee at least 3 days to provide the employer with documentation.

Posters to display at the workplace regarding the Paid Medical Leave Act can be downloaded from the Wage and Hour Division’s website.

Employers should use this increased lead time to review and revise their leave policies and procedures before the March 29, 2019 effective date.

Improved Workforce Opportunity Wage Act

Beginning March 29, 2019, the minimum hourly wage in the state of Michigan will increase to $9.45.  Tipped employees’ minimum hourly wage will be 38% of the general minimum wage ($3.59 beginning  March 29, 2019) provided the tips received plus the wages paid equals or exceeds the minimum hourly wage and if not, the employer pays the difference.  Minors 16 to 17 years of age may be paid 85% of the minimum hourly wage ($8.03 beginning March 29, 2019).  Newly hired employees between 16 and 19 years of age may be paid $4.25 for the first 90 days of their employment.  Minimum wage posters to display at the workplace can be downloaded from the Wage and Hour Division’s website.

Michigan Regulation and Taxation of Marijuana Act

Even though marijuana has been legalized for adult recreational use in the state of Michigan, employers can still do pre-employment and random drug tests on employees and require zero tolerance policies for their employees.  Employers can also refuse to hire, fire, or discipline employees who test positive for marijuana.

Tax Cuts and Jobs Act: Impact on Individuals

Below is an overview of the tax provisions in the Tax Cuts and Jobs Act (TCJA) that have an impact on individuals.  While this is not a comprehensive list, these are some of the more important elements of the new law.  Please feel free to contact our office to discuss any of these tax provisions and how they impact you specifically.

  • Tax rates – The new tax rate structure contains seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.  The rates applicable to net capital gains and qualified dividends did not change.
  • Standard deduction – The standard deduction increases to $24,000 for joint filers, $18,000 for heads of household, and $12,000 for singles and married taxpayers filing separately.   With these increases, many taxpayers will no longer be itemizing deductions.
  • Exemptions – Personal and dependency exemptions have been eliminated.
  • Child and family tax credit – The credit for qualifying children increases to $2,000 and there is a new $500 credit for a taxpayer’s dependents who are not qualifying children.
  • State and local taxes – The itemized deduction for state and local income and property taxes is limited to $10,000.
  • Mortgage interest – Beginning with loans taken out in 2018, the itemized deduction for mortgage interest on loans used to acquire a principal residence and a second home is only deductible on debt up to $750,000.  The deduction for interest on home equity loans has been eliminated.
  • Miscellaneous itemized deductions – Miscellaneous itemized deductions have been eliminated.  These deductions included items such as tax prep fees, investment expenses, union dues, and unreimbursed employee expenses.
  • Medical expenses – Itemized deductions for medical expenses are deductible to the extent they exceed 7.5 percent of adjusted gross income.
  • Casualty and theft losses – This itemized deduction has been suspended except for losses incurred in a federally declared disaster.
  • Moving expenses – The deduction for job-related moving expenses has been eliminated with the exception of certain military personnel.
  • Alimony – Alimony will no longer be deductible by the paying spouse and will not be taxable to the receiving spouse for divorces and separations that occur after 2018.
  • Health care “individual mandate” – Beginning in 2019, individuals who fail to obtain minimum essential health coverage will no longer be penalized.

Tax Cuts and Jobs Act: Impact on Businesses

Below is an overview of the tax provisions in the Tax Cuts and Jobs Act (TCJA) that have an impact on businesses.  While this is not a comprehensive list, these are some of the more important elements of the new law.  Please feel free to contact our office to discuss any of these tax provisions and how they impact you specifically.

  • Corporate tax rates – The corporate tax rate is now a flat 21%.
  • Net operating loss (NOL) deduction – NOLs arising in tax years ending after 2017 can only be carried forward, notback.  A two-year carryback for certain farming losses is still allowed.  The NOLs can now be carried forward indefinitely as well.
  • Domestic production activities deduction (DPAD)– The DPAD deduction has been eliminated. However, a new deduction was created that many businesses will be able to take advantage of (see below).
  • Qualified business income deduction (QBID) –There is a new deduction of up to 20 percent of qualified business income for partnerships, S corporations, and sole proprietors.  There are limits based on income and type of business.
  • Deduction for meals and entertainment – The 50% deduction for business-related entertainment expenses has been eliminated.  Business meals are still deductible (50%) aslong as the taxpayer (or employee of taxpayer) is present, food/beverages are not lavish or extravagant, meals are provided to current or potential business customer, client, consultant, or similar business contact, and food/beverages are purchased separately if at an entertainment activity or the cost is reported separately on the receipt.
  • Family and medical leave credit – A new general business credit is available to employers that offer paid family and medical leave to their employees.  The credit is a percentage of wages paid to an employee while on family/medical leave for up to 12 weeks per year.  The percentage can range from 12.5% to 25%.
  • Code Section 179 – The maximum amount that maybe expensed under Code Section 179 has increased to $1 million.  The phase-out threshold increased to $2.5 million.  The expense election now also includes certain improvements made to nonresidential real property (i.e. roofs, heating, ventilation, air conditioning, and fire protection/security systems).
  • Bonus depreciation – Business property acquired after September 27, 2017 and before 2023 is eligible for 100 percent, first year bonus depreciation.
  • Moving expense reimbursements – Employers must include reimbursements for moving expenses in employees’ wages, subject to taxes.

Tax Relief for Local Flood Victims

Individuals and businesses located in the counties of Bay, Gladwin, Isabella and Midland Counties and the Saginaw Chippewa Indian Tribe within Isabella County may qualify for tax relief due to the severe flooding which occurred June, 2017.  Those areas have been given Federal disaster status, which allows certain benefits to those affected.

The IRS has authority to postpone certain deadlines falling on or after June 22, 2017 up until October 31, 2017.  This includes income tax returns with an original or extended due date between June 22, 2017 and October 31, 2017, estimated tax payment due September 15, 2017 and quarterly payroll tax returns which were due July 31, 2017.

For those who experienced significant damage due to the flood, casualty losses may be claimed on their tax returns to offset taxable income.  Because our area received the Federal disaster declaration, taxpayers may choose whether to claim the loss on an amended 2016 return to obtain a speedier refund, or on their 2017 return.  Measurement of the loss is very specific, and any reimbursements, such as insurance and FEMA payments, reduce the deductible loss.  Also, you must be able to itemize deductions on your Federal income tax return to receive a tax reduction benefit from the loss.

Below is a link to the IRS notice dated August 3, 2017 providing more detailed information.  If you feel  any of the tax relief provisions can apply to your situation, please contact our office for assistance.

https://www.irs.gov/uac/newsroom/tax-relief-for-victims-of-severe-storms-and-flooding-in-michigan-1