This month in Massachusetts, two new laws take effect that will impact business owners. The first will have serious consequences for employers who fail to properly pay their employees, while the second will affect 401(k) salary deferral deductions.

Effective July 15, 2008, a new law will force Massachusetts employers to pay triple damages to plaintiffs who successfully sue their employers for wage and hour claims. Previously, triple damages were awarded only for the most serious violations. The new law, however, automatically imposes these damages for any employee who has lost wages or benefits under the state’s laws – even if the violation was unintentional.

According to Employment Law Advisor, the new law has many court watchers anticipating an increase in claims by employees and their attorneys. And while insurance such as EPLI does not cover wage and hour claims, employers can protect themselves by partnering with a Professional Employer Organization. The PEO handles all payroll functions for the client, essentially sharing the burden of payroll with the employer. While the employer is still responsible for providing the PEO with the correct number of hours for which each individual employee should be paid, PEOs can help clients avoid wage and hour violations by working to ensure that the employer is in compliance with all wage-related laws.

The second law to take effect this month states that partners and other self-employed individuals will no longer be able to deduct 401(k) salary deferrals. This change will affect partners, sole proprietors, and members of LLPs and LLCs taxed as partnerships, as of the tax year starting January 1, 2008.

While these individuals may still make contributions to their 401(k) plans, and are entitled to the Federal deduction, they will no longer be able to take the State deduction. All affected individuals should maintain immaculate records to substantiate the deduction of previously taxed contributions, in order to avoid double taxation.

To find out more about either of these new laws, contact Genesis today. We are always here to help.