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Year-End Guide 2023

Here to make your life easier during Year End

Watch Year-End Webinar

California Paid Sick Leave Update for 2024

Updates to California's Paid Sick Leave requirements become effective January 1, 2024.

According to the new legislation in California, employees are now required to accrue a minimum of:
•    24 hours of sick leave by their 120th calendar day of employment
•    40 hours of sick leave by their 200th calendar day of employment
•    40 hours of sick leave per year starting with their second year of employment

Reviewing your written company policy is best to ensure compliance. If you need assistance ensuring the system tracking aligns with these compliances, PayNW can audit the policy configuration in our system for a fee of $200. Should the system audit reveal any non-compliance, the most straightforward approach to ensuring adherence is to front-load the minimum balance at the beginning of the employees' tenure. If you have an alternative update in mind, we are more than happy to make these configuration changes at our standard hourly rate.

New Tax Registration Services Available

Get your new states registered for payroll taxes quickly and easily with PayNW's Tax Registration Service.

At PayNW, we're experts in payroll tax registration. We're fast and efficient, ensuring that your new states are registered as quickly as possible so you can start paying payroll taxes in compliance with state regulations and have confidence knowing that your registration will be done correctly and on time.

We'll handle the entire process for you, from registration to setup to tax processing, so you can focus on what you do best: running your business. 

Email our service team at or contact us to learn more.

Important Note: Don't forget, PayNW is committed to delivering exceptional service to facilitate the registration of your tax accounts. But it's important to note that the responsibility for ensuring timely compliance with payroll tax regulation lies with your company. Please be sure to review and adhere to any agency mandated tax deadlines to avoid any potential penalties and interest charges.

Protect Employees and Your Business From Payroll Fraud

It is crucial to ensure you and your employees are protected. We highly recommend voice verification for direct deposit changes.

It is of paramount importance that we maintain the highest level of security and integrity in our financial processes, particularly when it comes to employee direct deposit changes. To ensure that your employees’ hard-earned money remains safe and secure, we strongly encourage all our clients to voice verify if a direct deposit change is requested from an employee via email.  This additional layer of security helps protect against unauthorized alterations, safeguarding your funds from potential identity theft or fraud. 

Employers should check out these two blog posts on payroll fraud, and direct deposit scams.

Update to Year End Delivery of Info Returns (W2 / 1099 / 1095C)

As our mission to make lives easier, we are now providing mailing of Year-End tax forms W2,1099, and 1095C directly to your employees and recipients.

Using the employee’s and recipient’s address in the system, we'll mail W2s, 1099s, and 1095Cs  directly to your employees' homes for a fee of $0.85 per form. This ensures early delivery and eliminates the need for internal distribution.

Your company is automatically enrolled in this convenient delivery option. If you opted out prior to November 30th, 2023, we will ship all forms to you in bulk for internal distribution. Shipping charges will apply based on the volume of forms.

Important Note: Please make sure to verify all employees’ addresses are up to date to ensure proper delivery of their year-end tax forms.


With weather conditions and the holiday season, clients are already experiencing delivery delays, and UPS and FedEx are not providing delivery guarantees. Please consider changing your shipping to an expedited method or submitting your payroll early to avoid delays. Contact your representative to discuss what options are best for you.

We also have Paycard options in lieu of issuing paper checks for employees. Email your Client Service Representative (CSR) or HCM Service Representative (HCM) at if interested in learning more.

ELECTRONIC W-2 / 1099 /

For employers who have chosen to enable Electronic Consent, employees may choose to receive their W-2s / 1099s / 1095-Cs electronically, in lieu of a paper copy by December 29th. To offer this feature to your employees, have them follow these easy self-service steps within the PayNW portal.

Employees who provide Electronic Consent may view and print their documents directly with Self Service, just as they would their pay statement today. PayNW will print and mail W-2s / 1099s directly to employees who do not provide electronic consent. 


PayNW will be closed to observe all Federal Holidays in 2023.

  • Thanksgiving Day, November 23rd
  • Christmas Day, December 25th

PayNW will be closed to observe all Federal Holidays in 2024.

  • New Year's Day, January 1st
  • Martin Luther King Day, January 15th
  • President's Day, February 19th
  • Memorial Day, May 27th
  • Juneteenth, June 19th
  • Independence Day, July 4th
  • Labor Day, September 2nd
  • Indigenous Peoples' Day, October 14th
  • Veterans' Day, November 11th
  • Thanksgiving Day, November 28th
  • Christmas Day, December 25th


The deadline for reporting fourth quarter and year-end payroll-related information and/or an adjustment is Friday, December 29, 2023. If adjustments are required after the deadline, we can reprocess your tax returns for an additional fee.

Reminder of Standard Payroll Processing Schedule

As a reminder, the standard payroll processing schedule is to submit payroll to us by 1:00PM PT, at least 2 business banking days prior to your check date. Payrolls submitted later are subject to rush processing fees. Please reach out to your CSR or HCM Service Representative with questions.

Note: Cannabis-related Business (CRB) clients require 3 business banking days prior to check date.

Please do the following before your final payroll of the year:


By law, insurance companies have until Monday, January 15, 2024 to inform you of any disability benefits paid to your employees during 2023.

If you were notified of benefits paid throughout the year, please contact your CSR / HCM Service Representative no later than Friday, December 29, 2023.

If you are notified about this type of payment after reporting your last payroll of the year, contact your CSR / HCM Service Representative as soon as possible.

In addition, if you have not already done so, please inform your insurance company that we will include third-party sick pay on W-2 Forms that we prepare for you.


The FUTA tax credit for these states may be reduced to 4.8 percent from 5.4 percent for the 2023 tax year. Each employer will incur an additional cost of $42 per employee for 2023.
For employers that paid wages in these states in 2023, you will see an additional collection for this tax at year end.

  • Employee Social Security numbers, date of birth, and addresses
  • Employee Name should be formatted to match their Social Security card
  • In-house checks
  • Voided checks
  • Fringe benefits (S-Corp Insurance for owners, Personal Use of Company Car, Group Term Life in excess of $50K, etc.)
  • Deferred Comp

Important Tax Updates and Agency Notices for 2024



State Unemployment and Washington Labor and Industries (L&I) will mail 2024 rate change notices starting this month directly to your business. Some agencies will notify you to obtain it online if they are only available electronically. Please forward them to your CSR / HCM Service Representative. We need the rate(s) to properly calculate your tax and returns correctly in 2024.



Employment Security will mail status notices detailing if you are eligible to pay the employer share of the premiums in 2024. The letters will have a subject of Annual Business Size Calculation. Please forward them to your CSR / HCM Service Representative. We need the letters to properly calculate your taxes and returns correctly in 2024.



With many states reducing staff during COVID-19, paper return processing has slowed down or temporarily halted. As a result, it is more important than ever to make sure you’ve reported the following information for your business so PayNW can electronically file your returns:

  • All state and local agency IDs

    Important: PayNW will not collect, pay, or file for agencies with missing ID numbers

  • All employee SSNs – many states will not accept quarterly state unemployment insurance (SUI) statements without SSNs



Upcoming Retirement Plan Changes

For tax years 2024 through 2027, retirement plans will be subject to new requirements that modify contribution, plan eligibility, and statement requirements. UKG is rolling out support for many provisions of Secure 2.0 Act, both mandatory and optional, beginning with the 2024 catch-up contribution requirements.

2024 Mandatory Provisions

  • Long-Term Part-Time (LTPT) employees working at least 500 hours per year for three years must be able to make employee contributions to retirement plans.
  • Deferred to 2026: Catch-up contributions for high-income employees age 50 and over, must be made as after-tax Roth contributions.



Alabama Overtime 2024 - Exempt Overtime Pay From State Income Tax

The exemption is for tax years beginning on or after Jan. 1, 2024, and ending prior to June 30, 2025. Alabama is exempting overtime pay from state income taxes, under a bill that will go into effect on Jan. 1, 2024.

Overtime pay is compensation paid to an hourly employee for work performed in excess of 40 hours in a week, under HB 217. The exemption will be available for tax years beginning on or after Jan. 1, 2024, and ending prior to June 30, 2025.

Employers must report overtime wages to the state revenue department starting for tax year 2023, under the bill. They must report the number of hourly employees who received overtime wages and the total amount of those wages.

For tax year 2023, the information is due by Jan. 31, 2024, under the bill. For all other tax years, employers must provide the information on a monthly or quarterly basis and no later than the due date for their monthly or quarterly withholding tax returns. The state revenue department will create forms for reporting the information.


Maryland Paid Family Leave Begins

All employers will be required to provide family and medical leave insurance. Employers will either enroll in the State Plan run by the Maryland Department of Labor’s FAMLI Division or seek approval for a commercial or self-administered plan with benefits equal to or greater than those provided by the State Plan. 

The Division will release more information about this process in 2024.

As of now:

  • The rate, which will become effective on October 1, 2024, will be 0.90% of covered wages up to the Social Security cap, and will be equally divided between employees and employers with 15 or more workers.
  • Employers may choose to cover part or all of their employees’ contributions.
  • Employers with 14 or fewer employees are not required to contribute but will still collect payments from their workers.


Vermont's New Child Care Payroll Tax Starts

As of 07/01/24, the Department of Taxes will implement and administer a new Child Care Contribution (CCC) tax, composed of a 0.44% payroll tax on wages and a 0.11% self-employment income tax.

Employers should note: 

  • Employers are required to pay a 0.44% payroll tax on all employee wages earned in Vermont.
  • An employer may choose to deduct and withhold a maximum of 25 percent of the required contribution (i.e., 0.11%) from employee wages.
  •  Employers will be required to remit CCC payroll tax payments to the Department in the same manner and frequency as they remit Vermont Income Tax Withholding, with quarterly reporting on the WHT-436 Quarterly Withholding Reconciliation. Additional tax guidance and updated forms will be available on this page as they are finalized.


Washington Paid Family Leave

Starting Jan. 1, 2024:

  • The premium rate will be 0.74%. The rate for 2023 is 0.8%.
  • Employers will pay 28.57% of the total premium and employees will pay 71.43% — a ratio similar to 2023

Important PayNW Policy Changes for 2024


Alterations to company policies that will affect 2024 payrolls should be submitted 3 weeks prior to payroll processing. This will give our team time to set up and test the changes.

Changes may include but not limited to:

  • Pay Frequencies
  • Time off / accrual policies
  • 401(k) plan changes

Benefit Renewals

We request you send us your benefits information a minimum of 30 days prior to your open enrollment start date. This allows us to complete the configuration changes timely. Late submissions may incur additional fees.


For clients subscribed to EverythingBenefits Carrier Connection, please note that late submissions of Open Enrollment dates and changes may incur increased fees. EverythingBenefits cannot guarantee timely execution for late submissions.

For clients subscribed to our ACA Manager Service


ACA Guides: Refer to the ACA Manager Admin Guide and ACA Ongoing Maintenance documents in readyConnect to assist you with ACA tasks. 

Key Dates


  • Now - December 31, 2023: Continue to review ACA reports and verify the accuracy of all data. Resolve any Compliance Alerts or incorrect data.
    • NOTE: ACA data is auto calculated by the first weekend date of each month through the end of the last month. ACA data should be reviewed at the beginning of each month, every month. December 2023 data will be reviewed at the beginning of January 2024


  • January 1, 2024 to January 12, 2024: Complete the “ACA Year End Checklist and Required Acknowledgement”.
    • The ACA Year End Acknowledgements checklist will be available in ReadyConnect. (assigned to users with Role of Company Admin)
      Select readyConnect icon  ReadyConnect icon (upper right) 
      Go to My Topics tab > ACA Year End Required Acknowledgments
    • Important: January 12, 2024, is the last day to complete any ACA data corrections.  Data corrections must be completed prior to submitting the 2023 ACA Year End Checklist and Required Acknowledgement.

      Failure to complete all checklist items and the required acknowledgments by January 12th, 2024, could result in processing delays and will incur an ACA Late Processing fee of $100.00 per company EIN. ACA data corrections needed after January 12th, 2024, will be subject to additional processing fees at a rate of $100.00 per hour with a one-hour minimum per affected company EIN and may require amended returns.
  • January 16, 2024 to February 16, 2024: PayNW will generate Employee Forms 1095-C and Employer Forms 1094-C. For employees who have not given Electronic Consent for Form 1095-C, paper forms will be printed and shipped before the IRS deadline of March 1, 2024.

March / April

  • March 1, 2024: Forms 1095-C due to employees.
  • April 1, 2024: PayNW will generate and electronically transmit IRS AIR files by the IRS deadline of April 1, 2024. State specific files, if required, will be electronically transmitted by the deadline established by each state.
  • April 1, 2024: ACA amended returns processing resumes.

IMPORTANT: “Renewal Benefits clients are encouraged to reach out to the Renewal benefits team with any questions regarding ACA filing requirements or benefit compliance issues. Reach out at


Effective with 2020 reporting, the IRS wants Non-Employee Compensation (Independent Contractors) reported on a separate form 1099-NEC instead of prior used form 1099-MISC. All processed compensation will be moved to the new 1099-NEC form on your behalf. The IRS now requires 1099-MISC to be used for other forms of compensation such as rent payments, prizes, attorney payments, etc. Should those alternative compensations apply to you, please reach out to your CSR/HCM for adjustments. Please refer to the updated IRS Instructions for 1099 for further details.


Effective January 1, 2024 the Washington state minimum wage rate will increase to $16.28 an hour.

Please note: Seattle and the City of SeaTac have higher minimum wage rates for 2024. For employers in those areas, the local minimum wage rate will apply as long as it is higher than the state minimum. Please ensure you are using the correct wage rate for your employees.

It is your responsibility to ensure employee rates are updated. PayNW will not intentionally change employee’s rate of pay without a request from the employer. Please contact your CSR/HCM for further questions or assistance.

Not in Washington State? 
Most other states with specific minimum wage rates tend to update said rates at or around January 1st, some even sooner. It's important to check with your state's department of labor to ensure you are prepared for any such changes.

NACHA Operating Rules Reminders 2023-24 

Each client authorizing PayNW to create and transmit ACH transactions is required to comply with the NACHA Operating Rules as stated within the ACH Services Addendum between PayNW and the client. The National Automated Clearing House Association (NACHA) is the rule making body governing the ACH network; therefore, all participants of the ACH network must comply with these Rules. 

NACHA rules specific to client originators include: 

  • Client agrees not to provide any payroll information or entries which violate the laws or regulations of the United States or of any state in which Client does business 
  • Client agrees to be in compliance with all NACHA operating rules and guidelines 
  • PayNW and its Originating Depository Financial Institution (ODFI) maintain the right to audit NACHA compliance and to terminate or suspend the ACH relationship for noncompliance with NACHA operating rules and guidelines 

Stay up-to-date with the most current NACHA Rules. The NACHA Rules are available online by setting up a user account. Visit the NACHA Rules Online by clicking here. 

Thank you for your business. From all of us at PayNW, we wish you and your family a happy and safe holiday season!