Top U.S. HR compliance changes to watch for in 2019

For the first time since 1914 only one U.S. state, Minnesota, will have a divided legislature next year. This means that unified legislatures are likely going to be able to pass their pet legislative initiatives at unprecedented rates, especially in states where the same majority party controls the governor’s office.

With the changing political landscape in mind, we’ve put together a summary of major HR compliance changes we believe will be important to employers in 2019.

Paid leave laws

In the face of federal inaction on paid family and sick leave laws, employers are increasingly being subjected to a myriad of complex state and local leave laws. Last year, no less than six states, five cities, and Puerto Rico had paid family and sick leave laws go into effect. Unless there is federal action to preempt other jurisdictions from passing paid family and sick leave laws, employers can expect localities and states to consider more of these laws in 2019.

In 2019, sick leave laws are scheduled to go into effect in Michigan, San Antonio, TX, and Westchester County, NY. The sick pay law in San Antonio, TX suffers an uncertain future as it faces challenges from various business groups and a recently-introduced Texas house bill that seeks to prohibit Texas municipalities from adopting or enforcing sick leave laws.

Covered Rhode Island employers will need to allow employees to accrue and use up to 32 hours of sick leave in 2019, up from 24 hours in 2018. In 2020 and beyond, covered employers will be required to provide employees with 40 hours of sick leave per year.

In family leave news, the state of Washington will begin assessing paid family and medical leave premiums on employee wages from Jan. 1, 2019. As the state of New York ramps up its paid family leave law that went into effect on Jan. 1, 2018, expect to see key changes to the amount of leave employees can take in a year, benefits payments, and the payroll deduction rate. Massachusetts passed a paid family leave law on June 28, 2018, with first contributions starting on July 1, 2019. District of Columbia paid family leave contributions are going to be collected from July 1, 2019.

For now, employers should closely watch proposed and future leave laws that may impact them. Large employers and employers with workers in multiple locations will need to make sure they have a comprehensive solution in place to comply with an increasing number of complex and inconsistent leave laws.

Auto-IRAs

Four U.S. states are scheduled to continue or start to roll out auto-IRA retirement savings programs in 2019.

The OregonSaves program has been in a phased rollout for employers of certain sizes since Jan. 1, 2018. Covered Oregon employers with 10 to 19 employees will be required to facilitate the program by May 15, 2019. Covered employers with five to nine employees have a deadline of Nov. 15, 2019.

Illinois’s mandatory Secure Choice Program went into effect for the state’s largest employers (500+ employees) in November 2018. Covered employers with 100 to 499 employees will be required to facilitate the program by July 2019. Covered employers with 25 to 99 employees have a deadline of November 2019.  

Expect to see Maryland’s Small Business Retirement Savings Program ramp up in “late 2019” for employers who do not offer some form of workplace retirement savings program to their employees.

Although Connecticut’s Retirement Security Program is scheduled to go into effect on Jan. 1, 2019, the overseeing authority does not yet have an executive director. In addition, technical and other guidance is essentially non-existent for employers.

Pay disparity laws

As is clear from my 2018 year-in-review blog post, pay disparity laws have been very popular across the United States at the state and local level.

California, Connecticut, Hawaii, Oregon, and Suffolk County, NY have all passed pay disparity laws that go into effect on Jan. 1, 2019. Illinois passed a law, effective Jan. 1, 2019, that generally prohibits employers from paying African-American employees at lower rates of pay than paid to other employees.

Anti-harassment and human trafficking laws

In the wake of the #MeToo movement, lawmakers got tough on sexual misconduct and human trafficking in 2018. This is especially true for California, where lawmakers have passed several laws that go into effect on Jan. 1, 2019:

• California AB 2034 – requires a human trafficking notice to be posted in a conspicuous place in a public area. Starting in January 2021, requires certain transit employees to undergo human trafficking training.
• California AB 2338 – in the entertainment industry, requires an age-eligible minor and the minor’s parent or legal guardian to receive and complete sexual harassment prevention training.
• California AB 2770 – protects employers who would like to state that they would not rehire a former employee based on the employer’s determination that the former employee engaged in sexual harassment.
• California AB 3109 – makes a provision in a contract or settlement agreement void and unenforceable if it waives a party’s right to testify about alleged criminal conduct or sexual harassment.
• California SB 820 – prohibits a provision in a settlement agreement that would prevent disclosure of information relating to certain claims of sexual misconduct or sex discrimination.
• California SB 1300 – prohibits settlement agreement provisions that prevent the disclosure of, among other conduct, sexual assault or harassment. The law also makes it unlawful for employers to provide compensation or a promise of continued employment in exchange for a release of a claim or right under the California Fair Housing and Employment Act.
• California SB 1343 - requires an employer with five or more employees to provide at least 2 hours of sexual harassment training to all supervisory employees and at least one hour of sexual harassment training to all nonsupervisory employees by January 1, 2020, and once every 2 years thereafter.

On Aug. 29, 2018, Delaware passed a sexual harassment training law that will go into effect on Jan. 1, 2019. The law also makes employers responsible for sexual harassment of an employee in certain circumstances and places certain notice and posting obligations on the covered employer.

As of Apr. 1, 2019, private employers in New York City with 15 or more employees will be required to conduct annual anti-sexual harassment training for all of their employees.

New federal overtime rule

After a series of setbacks in 2017 and delays in 2018, the U.S. Department of Labor (DOL) is expected to finally develop a new overtime rule in March 2019 that will increase the minimum salary threshold for exempt employees. This has the potential to push U.S. employers to consider increasing wages for tens of thousands of workers.

The DOL also anticipates issuing a proposed rule on the regular rate and the basic rate and an NPRM to update its joint employment regulations sometime in December 2018. The DOL was supposed to issue an NPRM on tip pooling in October 2018 but this rule is still forthcoming.

Affected employers may want to closely monitor proposed rulemaking from the DOL in the coming months.

Minimum wage

Every year-end seems to see a flurry of minimum wage changes and this year is no exception. Expect to see minimum wage increases in 19 states and 26 cities and counties at the end of 2018 and the beginning of 2019. Also, effective Jan. 1, 2019, federal contractors must generally be paid $10.60 per hour for work on or in connection with covered contracts.

A total of three states, the District of Columbia, and 18 cities and counties are already scheduled to increase their minimum wage rates later in 2019. As grassroots advocacy like the Fight for $15 movement continues, states, counties, and cities across the country are going to be lobbied to write new minimum wage increases into law in 2019.

Employers, especially those operating in multiple jurisdictions, should consider reviewing their pay policies to ensure they are complying with the complex web of minimum wage rates that are likely to impact their businesses.

To stay up to date on minimum wage rates, customers should visit our Summaries and Charts page.

Read more compliance and legislation blog posts and news articles 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.