2016 Business Headline Roundup
What a year for headlines! As we bid farewell to 2016, let’s take a look back at the top stories that have impacted business owners.
The Overtime Rule
On May 18, President Obama announced the publication of the Department of Labor’s final rule on overtime regulations extending overtime pay protection to more than 4 million workers. The new rule raises the salary threshold in which employees must receive additional pay for time worked over 40 hours to $47,476 annually from the current $23,660 established in 2004.
This caused quite a stir as employers began scrambling for cost-efficient ways to comply with the December 1st deadline. While most agreed the rule was a necessity, considering it hadn’t been updated in more than a decade, many business groups argued that it was too much, with too quick of a deadline.
In September, officials from 21 states filed a lawsuit challenging the rule, while the National Federation of Independent Businesses (NFIB) made a plea to delay the deadline. On November 22, a federal judge in Texas blocked the rule, putting it in jeopardy. On December 1, the day the rule was to take effect, the Justice Department, on behalf of the Department of Labor, filed a notice of appeal in the U.S. District Court. Right now, the rule’s fate is uncertain.
Since its enactment in 2010, Obamacare has burdened small business owners with many changes. One of the biggest came in 2016: businesses with 50-99 full-time equivalent employees have to provide health insurance to at least 95% of their full-time employees and dependents up to age 26, or pay a fine. Previously, small businesses were excluded from the rule.
Even though small businesses were aware the change was coming, many were not prepared.
Since the ACA is very complex and lacks transparency, what constitutes full-time caused some confusion. Staying compliant wasn’t only a headache, it resulted in time-consuming and costly audits for those who didn’t get it right. These audits have caused a strain, especially on small businesses who lack a designated Human Resources department or manager.
In October, it was reported that average premiums for popular ACA Plans would rise by 25% in 2017, up from 10% that was projected in August.
According to Newsweek, the reasons include: not enough younger enrollment to offset the price to treat older and sicklier individuals; failure of the risk corridor, a type of risk-pooling fund among insurance companies operating on the Obamacare marketplace exchanges; and a declining number of insurer options to choose from.
The NJ/PA Reciprocity Agreement
In early September, New Jersey Governor Chris Christie announced that he would pull out of a decades-old income tax agreement with Pennsylvania which has allowed New Jersey and Pennsylvania residents to pay taxes where they live rather than where they work.
While Christie claims it’s hurting the state’s bottom line, Pennsylvania Governor Tom Wolf criticized the decision saying it would “punish 125,000 Pennsylvanians and cost the commonwealth $5 million annually.”
But on November 22, with just six weeks to go until the change was to go into effect, Christie announced he was reinstating it. This came as a relief to thousands of New Jersey and Pennsylvania residents who commute across the Delaware River for work, as well as large New Jersey employers like Subaru, who began debating whether to put some million-dollar projects on hold.
It was a roller coaster year for politics as Hillary Clinton and Donald Trump jockeyed for president. It was a race filled with alleged scandal and corruption that culminated with the unexpected victory of Donald Trump, sending the country into a frenzy of uncertainty. Now as he prepares to take office, we are learning what impact he will have on the hot topics.
The Overtime Rule – It’s been reported that Trump may be receptive to calling for a small-business exemption and doing away with the automatic 3-year increases slated to begin on January 1, 2020. With the latest developments however, the fate of the rule is in limbo. Employers are being advised to plan accordingly and not assume much, if anything, will change.
The ACA – While Trump denounced Obamacare repeatedly during his 16-month campaign, recent headlines have reported that he has softened his position. While uncertainty remains just how much of the ACA will be repealed and retained, there’s no doubt it’ll be one of the new president’s greatest challenges.
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