Between the government’s tax overhaul, a list of fluctuating ACA regulations and the challenges created bynew technology, It’s not going to be an easy year for smallbusinesses. These issues and more made the list of top regulatoryissues small businesses will need to be ready to confront in 2018,according to Paychex, Inc.

“With so many regulatory changes and legislative reforms eitherproposed or slated to take effect in the coming months, it can bechallenging for busy small business owners to keep up with wherethings stand,” says Paychex president and CEO Martin Mucci. “Oursummary of the year’s most important regulatory developments isdesigned to help small business owners understand how newregulations will affect their businesses in 2018.”

What else do small businesses need to worry about this year?

Let's take a look >>>

1. Tax reform

The GOP’s tax overhaul included changes to everything from thecorporate tax rate to deductions for common business incentives.

According to the report: “Employers will need to implementwithholding changes once the Internal Revenue Service (IRS)releases updated tables. The IRS has indicated that the informationin the withholding tables will be designed to work with the currentW-4 for 2018. The changes to the individual tax code will expire in2026 without additional Congressional action. … To further reducethe tax burden for these entities, Congress added a deduction ofbusiness income for pass-through entities of up to 20 percent, butthere are complex requirements and guardrails for the applicationof this deduction. Businesses should stay tuned as the impacts ofthis policy evolve.”

2. State reaction to federal tax reform

States that take their cues from the federal tax standards willhave a lot of scrambling to do to adjust their own systems andregulations, while other states will be adjusting their ownprocesses to mitigate the effects of federal reforms.

According to the report: “In general, the bulk of the statesconform to the Internal Revenue Code (IRC) to some extent – somestates directly conform, others conform with carve-outs, and someconform to the code on a specific date. Based on the new tax law,date-specific conformity would require legislative changes if thestates choose to conform to the code.

“Along the same lines, each jurisdiction will need to assess theimpact of decoupling or following the IRC on their budgets andtheir constituents, which may lead to withholding changes thatcould be implemented retroactively in some cases. Otherconsequences from the federal tax overhaul may require statelegislatures to examine how they support their health caremarkets.”

3. Affordable Care Act (ACA)

The tax bill was also responsible for perhaps the biggest impacton ACA this year: repeal of the individual mandate penalty. But howdoes that affect employers?

According to the report: “it should be noted that this does notchange the filing requirement for the individual mandate. Under theindividual mandate, the IRS requires self-insured employers andinsurers to report individuals covered by their plan orface penalties. Additionally, other provisions in the ACA,including the employer shared responsibility provision, remainunchanged. Employers should do their due diligence preparing forcurrent year ACA filing obligations and gathering 2018 tax yeardata for next year’s filing.”

4. Paid leave laws

Order is slowly coming to the hodgepodge of local and stateregulations pertaining to paid leave, and that process is expected topick up in 2018 after New York instituted the firstcomprehensive paid family leave regulations.

According to the report: “All the paid leave laws, passed orproposed, vary in their complexity, but the family leave laws arethe most onerous. Provisions related to employer coverage, employeeeligibility, employee/employer notice requirements, recordkeeping,and penalties are found in all paid leave laws. Employee payrolldeductions and employer taxes are also prevalent in paid familyleave laws. There is also often the need to coordinate these lawsand their provisions with other applicable leave laws such as thefederal Family and Medical Leave Act. Also on the horizon, a recentproposal in Congress, the Workflex in the 21st Century Act. Thislegislation, if passed, could pre-empt many of the paid leave lawsat state and local levels, where employers elect to voluntarilyoffer paid leave and flexible work schedules as prescribed in thelegislative proposal.”

5. Employee verification

The Trump Administration’s crackdown on immigration policiesisn’t going unnoticed by employers. A revised I-9 Form for employment eligibilityverification was issued in 2017, a relatively minor adjustmentcompared to other possibilities on the horizon.

According to the report: “While documentation audits andworksite inspections seemed to level off in 2017, Immigration andCustoms Enforcement has warned that it will quadruple the number ofworksite inspections in the coming year, consistent with PresidentTrump’s pre-election platform and post-election agenda regardingimmigration reform. Additionally, if passed, the Legal WorkforceAct introduced in 2017 could eventually phase out the Form I-9 inits current form. Under the proposed legislation, mandatory use ofthe E-verify system would be phased in for all private employers.”

6. Overtime regulations

Employers were granted a reprieve last year with the delay ofnew FLSA overtime standards introduced under theObama administration. But the issue isn’t dead yet.

According to the report: “Activity related to federal overtimeregulations will continue in 2018. Over the summer, the Wage andHour Division of the U.S. Department of Labor released a Requestfor Information soliciting public comments on the existing overtimeregulations that define and delimit exemptions from the federalFair Labor Standards Act’s minimum wage and overtime requirementsfor certain white-collar employees. … While employers are remindedto continue their compliance with the existing federal overtimeregulations, as well as applicable state requirements that mayincorporate salary levels that exceed the federal level, newfederal overtime regulations could be adopted and in place by early2019.”

7. Pay equity

Another regulation that saw a delay in 2017 was the addition ofwage and hours data to the EEO-1 form. Whether these additions will berevisited remains to be seen, but other changes to the form willtake effect in 2018.

According to the report: “Employers should note that the changesmade to the submission date of the EEO-1 (March 31, 2018) and the“workforce snapshot period” (4th calendar quarter of 2017) are ineffect for 2018 submissions. ... Pay discrimination based on genderalso continues to be an area of great concern for states looking tomore aggressively address recognized and documented gender pay gaps and to ensure pay equity in theworkplace. States, and even some local jurisdictions, will likelycontinue to push through legislative proposals in 2018 to ban orlimit the collection and use of salary and benefits historyinformation in the hiring process.”

8. Privacy

After a slew of high-profile data breaches in 2017, informationsecurity is top-of-mind for many businesses, not to mentionregulators. New York and Colorado are leading an expected trend inincreased regulations and enforcement of data securitystandards.

According to the report: “States’ attorneys general and federalregulatory agencies, such as the Federal Trade Commission and theConsumer Financial Protection Board, readily use their legalauthority to investigate and bring enforcement actions againstbusinesses for data security failures that lead to data breaches. …Additionally, with the increased adoption of biometric technology in the private sector,privacy laws regulating the collection and use of biometric data,such as those in Illinois, Texas, and Washington, may becomenationwide industry standards.”

9. State and municipality retirement plans

Myriad issues are driving more states to create (or consider)state-run retirement plans. Oregon rolled out its OregonSaves program lastyear, and programs are expected to roll out over the next two yearsin Illinois, Connecticut, California, Maryland, Vermont andWashington.

According to the report: “Employer requirements vary by state,with some requiring employer participation based on employer sizeand others keeping employer participation voluntary.Auto-enrollment of employees is also a state-specific provision. …Businesses not currently offering their employees a retirement planwill need to watch individual state developments closely.”

10. Payment evolution

Employers with outdated payroll systems may find themselves in abind when it comes to recruiting and retaining talent. Faster payment capabilities, including dailypaychecks and near-real-time payments, are growing in popularityand utilization and becoming more accessible to small-businessowners.

According to the report: “In September of 2017, the second phaseof Same Day ACH, permitting debits up to $25,000, became a paymentoption, giving cash flow management a boost. ... Demand for fasterand more convenient options for paying out tips to employees isexpected to grow in 2018. Small businesses should work closely withtheir financial institution, payment processor, and vendors toidentify opportunities as the availability of faster paymentsdevelops.”