IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog has been provided by Eric Cormier of Insperity (www.insperity.com):
New Employment Laws for Privately Held Companies to Watch in 2020
Every new year brings new employment laws, and 2020 is no different.
There are some big changes employers need to know about at the federal, state and local levels.
Change at the federal level: White-collar exemption rules
Updates to the so-called “white-collar exemption” to federal overtime rules have been in the works for a long time. For many years, the minimum salary exempt employees could earn was $455 a week, or $23,600 per year.
The Obama administration planned to raise the minimum to $913 a week, or $47,476 per year, by December 2016. Lawsuits and an administration change paused implementation of the new wage rules.
Now, though, the Department of Labor is phasing in the new minimums. As of Jan. 1, workers must earn at least $684 a week, or $35,568 per year, to be exempt from federal overtime rules.
There’s more to the white-collar exemption than minimum pay, but the minimum salary change is what employers must know to be compliant as of Jan. 1.
Changes at the state and local level: Paid leave policies
The federal Family and Medical Leave Act (FMLA) requires that qualified employers grant up to 12 weeks per year of unpaid leave to eligible employees who need to care for family members or themselves.
However, some states and local governments are implementing more generous leave policies for employees. Many of those new rules have 2020 deadlines that employers must comply with.
For example, Massachusetts’ paid leave law took effect in September 2019. The tax registration and first quarterly report deadlines for employers are Jan. 31, 2020. Employers in the state should use 2020 to get ready for compliance, as most benefits become available in 2021.
New York is also phasing in more elements of its paid leave law in 2020:
- Agricultural workers will be eligible for paid leave as of Jan. 1, 2020.
- The state is also raising the wage replacement benefit to 60% of the average weekly wage for employees on leave.
- New York-based businesses should also plan now for the 2021 expansion of paid leave from 10 weeks to 12 weeks – with a 67% wage replacement benefit.
In California, state-mandated paid leave expands from six weeks to eight weeks as of July 1. That law also calls for the eventual expansion of paid leave to as much as six months for new parents, and a wage replacement benefit of up to 90% for low-wage employees.
At the local level, Dallas’ new paid sick leave requirements take effect April 1, 2020 for employers with more than five employees.
The ongoing trend: Leveling the playing field for candidates and employees
One recent trend is making the workforce more inclusive and equitable through the change or elimination of hiring and management practices that have a disproportionately negative impact on specific groups of people.
1. Anti-harassment and anti-discrimination laws
New York and Illinois are among several states expanding worker protections against harassment and discrimination in 2020.
For example, starting Aug. 12, 2020 the statute of limitations for filing a sexual harassment complaint in New York will expand from one year to three years.
In Illinois, January ushers in a new requirement for employers to provide yearly anti-harassment training to all employees. Other changes that take effect in 2020 in Illinois include:
- Protection of contract workers from harassment and discrimination
- Restrictions on the use of nondisclosure agreements in discrimination and harassment cases
- Provision of portable safety call devices for hotel and casino workers who enter guest rooms and other isolated spaces
2. Pay equity laws
Several state employment laws designed to correct the underpayment of women and minorities take effect in 2020.
As of Jan. 6, employers in New York are prohibited from asking about or researching candidate and employee salary histories. New Jersey also has a new salary ban law, effective Jan. 26.
At the city level, similar rules take effect in Cincinnati and Toledo, Ohio, later in 2020. They will apply to employers with 15 or more employees.
3. LGBT employment protections
The Supreme Court may decide by summer 2020 whether LGBT employees are protected under the 1964 Civil Rights Act.
How to keep up with employment law changes
The first step in keeping up with employment laws is deciding who’s responsible for monitoring compliance.
If you have an HR person or team, they should stay up to date on these changes. But if your business structure is complex, or if you operate in many states, your HR team may need extra support to keep tabs on everything.
If you don’t have in-house HR, you’ll need to decide how much compliance monitoring your team can take on without pulling focus away from core business activities. Some resources that can help you stay informed are:
- SHRM (Society for Human Resource Management), a leading professional organization and news source for HR topics
- State, city and county labor law websites. Set up an RSS feed or newsletter subscription for updates.
- Local, state and national media. Especially during election seasons, employment law is in the news often.
- Your employment law attorney. They should alert you to changes that affect your employees.
When to pay closest attention
Whoever is responsible for compliance in your organization should always be keeping tabs on employment law news. But it’s important to pay especially close attention during:
1. Election season
Politicians at all levels campaign on policy changes, including employment policy. Some of those ideas may eventually become law, and businesses should follow their progress so they can prepare.
2. When new people take office
Newly elected politicians sometimes roll back or delay employment laws passed by previous officeholders. The Trump administration’s pause and revisiting of the Obama-era changes to white-collar overtime exemption rules is a good example.
What to do if you’re out of compliance
Keeping up with employment law takes a lot of research and time. If you’re not getting the right information, or if you don’t execute on that information correctly, you could be out of compliance almost immediately.
What should you do if you discover your business is out of compliance? Take steps immediately to correct the problem.
That’s especially true if an employee is the one to alert you to a compliance issue. If the employee feels they’re being treated unfairly, you could face costly legal action.
In a scenario like this, you need to:
- Verify whether and how your organization is noncompliant.
- Understand what the compliance requirements are.
- Learn what factors contributed to the employee’s complaint.
Dealing with this type of situation is stressful for everyone. The best way forward is to accept the consequences of being noncompliant and work to correct the problem, so it doesn’t happen again.
How to use new employment laws as a culture check for your organization
Compliance is critical, of course. But employment law news and trends can serve as cues to review your employee-related practices.
Is your organization ahead of the curve or falling behind?
For example, even if your business isn’t required by law to provide paid parental leave, would offering it increase your organization’s retention rate or give you a recruiting advantage over your competitors?
Or perhaps your organization is based in a state that doesn’t require annual anti-harassment and anti-discrimination training for all employees. You might review your current training and culture and decide that implementing annual training is the best choice for building a diverse group of talent and a culture of innovation.
You can learn more about HR compliance best practices when you download our free e-book: HR compliance: Are you putting your business at risk?
Terry Polyák is a CBPA (Certified Business Performance Advisor with Insperity, a market leading company in outsourced HR services. If you have questions about the content of this article or would like to obtain information related to the services Insperity offers its clients, Mr. Polyák would welcome communication at (425) 748-7565 or Terry.Polyák@insperity.com
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