December 4, 2019

The U.S. HCM compliance year in review

The FLSA, the EEOC, Component 2, $35,568, and Jan. 1, 2020 – if we were to sum up 2019 solely by the numbers (and the letters), we’d have more than enough to talk about.

As we wrap up the year—and the decade—let's take a look back on a few of this year's stand-out legal trends and developments in U.S. human capital management. 

Increase to the FLSA minimum salary level for overtime exemptions

Say goodbye to the $455 per week standard salary level (well, unless you’re in the U.S. Territories.)

As the clock ticks closer to Jan. 1, 2020, it appears that the U.S. Department of Labor’s (DOL) long-anticipated and fiercely challenged efforts to increase the minimum compensation requirements for certain overtime exemptions will finally, for real this time, take effect. The DOL’s Final Rule raises the minimum salary level required for certain executive, administrative, and professional employees to $684 per week (or $35,568 per year).

So, just another friendly reminder: if you have employees who are currently classified as exempt and who are not paid at least a minimum weekly salary of $684 on Jan. 1, 2020, these workers will lose exempt status and become newly eligible for overtime.

(Note: As we’ve discussed previously, meeting this minimum salary level is only one of several requirements to achieve exemption from overtime otherwise required by the federal Fair Labor Standards Act (FLSA). The DOL’s new rule does not address or change other requirements, such as the requirement that pay be made on a salaried basis or the complex and fact-specific duties tests. Employers will still be responsible for assessing and meeting these additional requirements.)

While you’re putting the finishing touches on your 2020 compensation planning in light of the new rule, don’t miss two new DOL Fact Sheets on Nondiscretionary Bonuses and Incentive Payments and Special Salary Levels for the U.S. Territories.

Much ado about nothing? EEO-1 Component 2 data reporting

Speaking of fiercely challenged efforts, 2019 was also the first—and perhaps only—year in which employers were required to collect and submit Component 2 pay data to the Equal Employment Opportunity Commission (EEOC). For those who may have since blocked out the memories of completing that task (or flown under the radar of compliance), Component 2 reporting required covered employers to look back to 2017 and 2018, then to report compensation and hours-worked data from those years for selected employees based on a workforce snapshot.

Despite admirable intentions of using the data to help find and eliminate pay gaps and discrimination, the collection process was met with near-constant legal, technical, and administrative challenges and roadblocks. The agency now reports that, oops, it underestimated the burden associated with collecting and submitting this data. Though the EEOC believes “the proven utility of Component 1 to EEOC’s mission justifies its continued collection,” the agency has opted not to renew its request for authorization to collect the expanded pay data of Component 2.

By the way, if you still haven’t submitted your Component 2 pay data, the reporting portal will remain open until Jan. 31, 2020.

Salary history bans: Because there’s more than one way to address wage disparity.

The EEOC’s data collection efforts were just one means of addressing wage gaps across the U.S. Several state and local jurisdictions also passed laws intended to lessen wage inequality.

Arising in the form of “equal pay laws” and/or “salary history bans,” these laws generally intend to interrupt patterns of wage disparity and discrimination by limiting employers’ access to and use of past wage data during the hiring process.

For example, effective Oct. 31, covered employers hiring in Kansas City, MO, could no longer “inquire” about an applicant’s salary history during the hiring process. Similar laws, with their own nuances and exceptions, have also taken effect this fall in Alabama, Maine, and Illinois, joining earlier effective dates for statewide laws in Hawaii, Connecticut, and Washington. Early next year, New Jersey and New York will join these states, with Colorado’s equal pay law taking effect in 2021.

In general, employers in these areas will need to review and potentially revise job applications, interview questions, and other hiring forms if they’re requesting salary data. And, unless exceptions apply, employers will need to refrain from considering salary history in the hiring process.

Paid leave laws: Leave for every need, including a case of the Mondays

Another year, another leave trend.

Not to be outdone by previous years, 2019 also brought the passage of several new and expanded employee leave entitlements. Connecticut and Oregon introduced expansive new paid family leave programs, while New Jersey overhauled their existing family leave law. California adjusted several existing leave entitlements, including expanding family temporary disability insurance benefits, organ donation leave, and lactation breaks. Still other states addressed leave for voting, emergency and military service, and victims of domestic violence and similar offenses.

Yet, the unique twist in 2019 was the introduction of three “any reason” leave laws. Specifically, Maine, Nevada, and Bernalillo County, New Mexico became the first jurisdictions to require covered employers to provide eligible employees with paid leave that can be used for any reason.

This is a trend that may gain popularity, particularly when one considers the alternative approach: a complex patchwork of leave accruals and entitlements and accompanying administrative headaches.

For example, you may recall that Westchester County, New York was among the localities that introduced a new Earned Sick Leave Law in 2018. Yet, even before that law took effect earlier this year, the county’s legislators identified gaps in its coverage of certain safe leave needs. So, enter yet another piece of legislation—the Westchester County Safe Time Leave Law.

Any reason leave laws could provide some much-needed simplification in this area, not to mention reduce the pages of legislative and regulatory text, guidance, and frequently asked questions spent discussing permissible uses of leave (details that employers must then understand, police, and enforce.)

The first of these “any reason” leave laws takes effect Jan. 1, 2020.

Fairly predictable: Fair Workweek and Predictive Scheduling laws.

Last, but not least—and certainly not least complicated, the trend of fair scheduling laws gained slow, but significant, momentum this year. Philadelphia and Chicago both adopted new fair scheduling laws in 2019, and these laws will bring significant challenges to employers in the new year.

The laws, primarily focused on retail and hospitality workers, seek to mitigate the schedule volatility among these and other shift workers. A patchwork of penalties, premiums, exceptions, and workarounds, the laws tend to favor employers that can provide self-service scheduling and shift trading to their workforces. If you’re among the covered employers, your non-exempt staff working in the respective city will need to be provided with additional scheduling information, including good faith estimates of work schedules and advance notice of schedule changes.

Meanwhile, employees will be entitled to “predictability pay” for late-breaking schedule changes. This additional pay could range from an additional hour of pay for schedule changes and additions to half the employee’s hourly rate for hours lost due to cancelled, shortened, or reduced schedules. For additional details, both of these laws are covered in depth in my previous blog post on the topic.

What else is in store?

Watch this space for a future blog post in which we’ll discuss a few of the coming trends and developments we expect to see in 2020. Whether we see more of the same, or a brand-new selection of compliance issues and challenges, one thing is for certain—2020 will not be a boring year.

Read more HCM compliance and legislation blogs and news on the Ceridian blog, and get the latest Canadian compliance blogs here.

Disclaimer: The information provided in this post is provided for informational purposes only and should not be relied upon or construed as legal advice and does not create an attorney-client relationship. You should review with your legal advisors how the laws identified in this post may apply to your specific situation.

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