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5 New 2020 Laws That Took Effect on January 1

January 1, 2020, 5:01 AM UTC

New year, same government.

But with the dawn of a new decade comes new laws, as passed legislation becomes effective on the first of the new year.

In 2020, Illinois will have legal recreational marijuana dispensaries, and California’s gig economy could take a turn, as most companies are required to treat contract workers as full-time employees.

There are plenty of changes coming at the federal level, too. Laws and department rulings effective Jan. 1 include a ban on mercury compound exports and the issuance of a coin commemorating the centenary of women’s suffrage.

More pertinent to the average U.S. resident, however, are the regulations surrounding issues like workers’ rights and healthcare.

Here are five new laws that went into effect on New Year’s Day 2020.

1. Medicare providers cannot include ‘gag clauses’ in pharmacy contracts

Congress’s Know the Lowest Price Act of 2018 went into effect on Jan. 1, 2020, meaning any Medicare prescription drug (Part D) plan beginning in the new year cannot prevent a pharmacy from notifying a customer if they could pay a lower price for a drug without insurance. The pharmacy cannot be penalized for taking such an action, either.

Previously, insurance providers could include “gag clauses” in their pharmacy contracts, preventing them from telling a customer if they could purchase the same drug over the counter for a lower price. By providing knowledge of other options, the Know the Lowest Price Act aims to lower costs for Medicare beneficiaries.

Private insurance companies and other federal programs, however, are not mentioned in the law.

2. More Americans are eligible for overtime pay

The U.S. Department of Labor has enacted higher earnings thresholds for executive, administrative, and professional employees to be exempt from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime pay requirements, updating the former 2004 standards.

Under the new rule, the DOL estimates 1.3 million workers will either become eligible for overtime pay or have their salary increased to the updated threshold level in the new year.

As of Jan. 1, 2020, those earning $684 per week are exempt from the FLSA requirements, compared to the former standard of $455 per week. For “highly compensated employees” (qualified by earnings and job duties), DOL raised the salary threshold from $100,000 per year to $107,432 per year.

Employers can also use bonuses and commissions paid at least annually to satisfy up to 10% of the standard salary level.

Workers whose salary falls below these new thresholds are entitled to the FLSA protections of a federal minimum wage of at least $7.25 per hour and overtime pay amounting to no less than one and a half times the regular rate of pay after working 40 hours in a work week.

3. All aircraft must have satellite tracking systems

The Federal Aviation Administration (FAA) announced in 2010 that all aircraft will have to equip Automatic Dependent Surveillance—Broadcast Out systems by 2020 in order to fly within most controlled airspaces.

The system, known as ADS-B Out, replaces radar with satellite signals, allowing for more precise and and longer-range transmissions. Aircraft equipped with ADS-B Out regularly transmit the plane’s GPS location, altitude, ground speed, and other data to ground bases and other aircraft.

Ten years after the rule’s initial publication, the regulation is going into effect. As of Jan. 1, most planes will need to be equipped with ADS-B Out, although many already had the system in place. ADS-B Out actually played a vital role in the FAA’s decision to ground Boeing’s 737 Max following two deadly crashes in 2019.

If a plane as ADS-B In equipment as well, pilots will be able to see the same weather and traffic information as those on the ground. Under FAA regulations, however, planes are only required to have the output transmitter.

4. New hires will complete a redesigned W-4 form

To reflect changes from the 2017 Tax Cuts and Jobs Act, the Internal Revenue Service changed the W-4 form employees have come to know since its last redesign in 1987.

The new form reduces complexity and increases transparency, says the IRS. Anyone starting a new job in 2020—and anyone who wants to change how much is withheld from their paycheck for taxes—will need to fill out the new W-4.

The main change is the elimination of allowances, the system formerly used to calculate withholdings. Allowances were tallied based on personal exemptions and dependency exemptions, which are no longer available under the new tax code.

Now, the form takes you through five sections to consider all forms of income, dependants, deductions, and other adjustments when determining the total amount to be withheld from each paycheck.

Whether or not you’re starting a new job, it can’t hurt to review your established withholdings, as having too little withheld can result in an unexpected bill and a fine. The IRS provides a calculator for workers to determine the right number for their paycheck.

5. Businesses may offer new health reimbursement arrangements to employees

Health reimbursement arrangements (HRAs) are plans funded by an employer that provide for the reimbursement of medical expenses up to a maximum amount within a set time period.

Several administrative departments decided in 2019 to reverse a former IRS mandate stating HRAs cannot be integrated with individual health insurance plans. Now, as of 2020, HRAs can be integrated with individual health insurance coverage or Medicare.

The decision is touted by the departments as a way to enable more small business employers to provide insurance to their employees.

To abate worries over the possibility of an employer steering an employee with known health concerns into the individual market, the rule forbids a plan sponsor from offering the same class of employees a choice between a traditional group health plan and an individual coverage HRA.

If offering an individual coverage HRA, the sponsor must do so on the same terms to all employees within the same class, subject to certain exceptions. Employees are able to be classified by several components, including whether they’re full time, part time, or working abroad.

The rule also allows businesses to offer two new HRAs: the individual coverage HRA or the excepted benefit HRA. The individual coverage HRA can provide reimbursements for individual insurance plan premiums and other costs, while the excepted benefit HRA is offered with group health insurance.

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