New Year Regulations that Employers Should Know Beforehand
The Year 2020 brings obligatory regulations both locally and nationwide for Employers to be aware off. Most notably, the Fair Labor Standards Act (FLSA) – the federal wage/hour law – will increase its pay package test to the “white collar” exemptions to approximately $35,000/year effective from January 1st. The Department of Labor (DOL), which is tasked with enforcing the FLSA, estimates 1.3 million currently exempt employees will be reclassified as nonexempt next year by its final rule.
Moreover, many states have enacted paid leave, background checks, drug testing, and non-compete legislation in the past year. As the New Year started, employers are accessing the next set of labor and employment laws and regulations they will face in the current year and beyond. However, as the New Year starts, employers should be sure to review overall state and federal compliance concerning employees, job categories, compensations, paid leave, job requirements, employee handbook language, and employee agreements.
As a conclusion, Securecheck360 would like to remind employers about certain changes that employers should consider while starting the year checklists.
- Confirm Number of Employees: Due to the latest changes in U.S. laws, both on a local and national level, changes in an employer’s business may impact the regulations that apply to it. For instance, if total number of employees reached 50 across all locations, it may have to comply with new set of requirements. Employers should count their total number of employees to determine what laws are significant to them. Notable milestones to cross are 15, 20 and 50 employees (for instance, the Family Medical Leave Act applies to organizations with 50 or greater employees, Age Discrimination in Employment Act applies to private associations with 20 or more employees, and Title VII and the Americans with Disabilities Act applies to employers with 15 or more employees).
- Job Categories and Compensation: Job responsibilities, essential functions, and compensation can change throughout the year. Employers need to assess whether employees are properly categorized (exempt vs. non-exempt). In September 2019, the DOL increased minimum pay requirements for overtime exemptions for executives, administrative, and professional employees. Under the final ruling, the pay package level for these white-collar exemptions increased from $23,660 per year ($455 per week) to $35,568 per year ($684 per week). The final ruling increases the annual compensation requirement for an employee to be considered a “highly compensated employee” and exempt from overtime from the current $100,000 per year to $107,432 per year. Employers must note that the highly compensated employee rule allows employers to use non-discretionary bonuses, incentive payments and commissions are rewarded at least annually to satisfy up to 10 percent of the basic salary level.
- Ensure Vacation and Leave Carryover: As employers finalize employees’ leave carryover and calculate vacation accordingly, they should also be sure to review local and state laws regulating paid leave this year. More than six states and localities have enacted some type of paid leave laws to take effect in 2020. These state and local regulations affect a variety of employers, some applying to organizations with as few as 10 employees. Effective January 1st, Nevada employers with 50 or more employees must provide employees with up to 40 hours of paid leave annually for any reason, with very few exemptions. Washington State has enacted a Paid Family Leave program that requires employers with 50 or more employees to pay a share of the state benefits program. Also, Washington employees are eligible to take up to 12 weeks of paid leave. These are only a few of the newly enacted paid leave laws that came into effect this year.
- Verify Notices and Posters: Employers must verify that they are up to date and have the latest versions of all the required posters and notices, especially in states and localities with new regulations that may impose additional posting requirements. For instance, New York State’s recent prohibition on discrimination against employees’ reproductive health decisions imposes employer notice requirements. The District of Columbia’s Paid Leave Act requires employers to post and maintain a notice to employees explaining the terms and conditions of their rights to paid leave benefits. These are the only two of several new posting requirements with which employers may be required to comply.
- Update Policies: Employee handbook policies should reflect an organization’s culture, expectations, and practices, as well as the current state of employment laws, starting this year. Among many common state and local trends related to discrimination, a few localities have joined California in enacting laws prohibiting employers from discriminating against racially specific hair bias. In addition to amendment of non-discrimination policies, anti-harassment, and dress code requirements, employers should also consider reviewing their grooming policies for prohibitions against natural hair, style, and textures, because these prohibitions may violate state laws.
- Guarantee Non–Compete Agreements Comply with Applicable State Laws: Employers should ensure non-compete agreements comply with any applicable state laws. For instance, Oregon, Rhode Island, and Washington have amended and enacted regulations on employee non-compete agreements. Oregon has amended its current regulation to now require employers to provide employees a signed copy of their non-complete agreement within 30 days of an employee’s termination. From third week of January 2020, Rhode Island will prohibit employers from entering into non-compete agreements with certain employees, including non-exempt and those 18 or younger. In Washington, non-compete agreements with employees who make less than $100,000 per are void from this January. Moreover, Washington has enacted a regulation creating a presumption that any agreement lasting 18 months or above is considered unenforceable.
Year start is a busy time for employers, but keeping up with these factors can help ensure a smoother start to the New Year.
Published: January 2nd, 2020