01/03/2024
Dear Payroll Clients and Friends,
We are writing to remind you to update certain information on behalf of your employees, as is either required by law, or is relevant to your company’s record keeping needs. Please refer to our web site at WittenbergCPA.com, for relevant government forms including: Form W-4, INS Form I-9 and the DSHS New Hire Reporting information. Also, if we prepare your company’s payroll, please provide us with the rate notices you’ve received from the Department of L&I and Employment Security.
Minimum Wage: State of Washington’s minimum wage for hourly employees will increase to $16.28 per hour, effective January 1, 2024. (Please note that the Federal minimum wage for hourly employees is currently $7.25 per hour.)
Minimum Salary: The Federally mandated minimum salary for “exempt” employees is $684 per week, effective January 1, 2020. Please note that in order to qualify to be paid a salary the employee must meet the requirements of being “exempt.”
Paid Family & Medical Leave: As a reminder, most employers are subject to the reporting and withholding requirements under this law, however employers with fewer than 50 employees will not be required to pay toward the combined .4% tax on their employee’s gross wages. Additionally, business owners, where their company was formed as either a sole proprietorship, partnership or LLC, are also not subject to this tax.
Effective January 1, 2024, both the premium rate and the split between employee and employee will change. The combined premium rate will decrease to .74% of employee’s gross wages, not including tips, up to the 2024 Social Security Cap of $168,600. Of this, employers with 50 or more employees will pay up to 28.57%, and their employees will pay 71.43%. (Note: Employers can opt to pay the full tax, at their discretion.)
Employees who are eligible to receive paid “family” or “medical” leave are required to submit their request for benefits to Employment Security. The Employment Security office, upon review of the benefit request, will provide the opportunity for review of the request by their employer.
Paid Sick Leave Reminder: As a reminder, all employees (including part-time & temporary staff) accrue paid sick leave for ALL hours worked (including overtime). For each hour of paid sick leave used, an employee shall be paid their normal hourly compensation. Employees are eligible to use their accrued paid sick leave beginning on the 90th calendar day after the start of their employment.
An employee shall accrue at least one hour of paid sick leave for every 40 hours worked. Accrued, unused paid sick leave balances of 40 hours or less must carry over to the following year. The default accrual year is January 1 – December 31, however an employer may adopt a different fixed consecutive twelve-month period. Also, it’s important to note that the employee’s accrued sick leave, use of sick leave, and balance carried forward must be disclosed at least monthly on the employee’s wage stub.
The Washington Cares Fund – Effective July 1, 2023: A new public long term care plan, based on a new payroll tax assessed on employees, at a rate of .58% of wages paid. There are exemptions from the upcoming payroll tax, including the “self-employed”, Federal employees and recognized tribal members.
Otherwise, the payroll tax will be assessed on employee salaries and wages, unless the employee has a qualifying privately issued long term care plan, and can provide proof of coverage to the employer, after having opting out of the public plan, by filing for exemption with the Employment Security Department. (Note: Employers can opt to pay the full tax, at their discretion.)
Retirement Plan Contribution Limits – Effective January 1, 2024:
The maximum allowable contributions for company sponsored retirement plans are increasing to start the new year. The maximum allowable 401(k) and 403(b) contribution (wage deferral) will be $23,000, with a catch-up contribution of $7,500, if over 50 years of age, and for a Simple IRA the maximum allowable contribution (wage deferral) will be $16,000, with a catch-up contribution of 3,500, if over 50 years of age.
Standard Occupational Classification (SOC) Reporting Requirements:
Beginning with the 4th quarter of 2022, the State of Washington Employment Security Department requires that an SOC be provided for each active employee of all employers, when quarterly reporting is completed. The assignment of codes is specific to each employees’ role with each company - here is a link to the ESD’s website providing additional information, as well as a list of the appropriate SOC’s for the employees of your company - https://esd.wa.gov/employer-taxes/about-soc.
Form W-4 Compliance: Please have each of your current employees review and revise their Form W-4 status. The annual completion of this form allows your employees to assess their withholding status, as well as confirm their social security number, marital status and mailing address.
Each new employee must complete a 2024 Form W-4 (lines #1-7) along with their signature, date of hire and date of birth. As the employer, you need to complete lines #8-10 of the Form W-4, and you must also complete and retain a form I-9, making sure that all sections are filled out completely. I.C.E. can fine your company up to $50 per incomplete, and/or incorrectly completed section, which can add up to $200 per form.
Payroll Record Retention: As a reminder, Washington State law requires (under RCW 50.12.070 and WAC 192-12-050) the following information be maintained by all employers:
• Name (in full) and date of birth of the employee
• Social Security number
• Days and weeks when work was completed
• Dates and hours worked (specific time in and time out)
• Wages paid for each separate pay period
• Location where work was performed
• Date when hired or re-hired to work
• Date when the individuals name was removed from the payroll
• Cause of separation from work due to discharge, quit, etc.
According to the State of Washington these employee records are to be kept for a period of at least four years, but our office recommends seven years. We also recommend that you maintain an employee policy and procedure manual, and that you review the overall content of your employees’ files, at least annually, for completeness.
In addition to maintaining the above employee information, we also recommend that you maintain two binders separate from your employee’s files. One that holds copies of your employee’s W-4’s; present employees first, with past employees in the back. The second one should hold copies of your employee’s I-9’s, in the same order as your W-4 binder.
Using this approach, you would be able to provide the required employee information to an auditor, if requested, without pulling each employee’s personnel file. Please don’t hesitate to let us know if we can assist you in completing the required employment forms, or to help you understand the rules, as they apply to your company.
Best Regards and Happy Holidays,
Wittenberg CPA, PS
