Mission to Grow Podcast Episode #85
Business owners are always thinking about auditing their functional systems and processes. But you also have to look at your HR foundation and everything in it.
In a recent episode of Mission to Grow, Asure’s podcast offering a small business guide to cash, compliance, and the war for talent, host Mike Vannoy spoke with Mary Simmons, VP of HR Compliance, about eight trending employment laws for employers to understand in 2024.
“One of the mega trends is that HR laws, employment laws are continually being fractionalized, not just from the federal but down to the state, to the city, to the county, to the local municipalities. These laws layer on top of each other. There are literally hundreds of updates,” said Vannoy.
White Collar and Highly Compensated Salaries
In the episode, Simmons shared that one of the biggest pieces of legislation to come on the federal level is the Department of Labor’s (DOL) white collar and highly compensated salaries legislation and the intent to increase them April of this year.
Simmons says if this DOL rule goes through in April, it has significant impact on many, many businesses, particularly those who have not raised their minimum wage. While certain states including New York, California, Washington, and Colorado, have extensive employment law at the state level, others like Florida, South Carolina, Iowa have fewer legislations and have not increased their hourly minimum wage beyond or far beyond the federal $7.25 minimum.
This DOL legislation will have significant impact on those states because if their minimum wage is that low, their white collar and highly compensated salaries are probably low as well, which means a mandated large boost in pay rates will be significant for many businesses in those states.
The white collar exemptions of course are the executive, professional and administrative exemptions, and they’re currently sitting at $684 a week, which is 35,500 and change a year. The DOL is proposing that it goes up to a little over a thousand dollars a week, which means over $55,000 annually.
Vannoy said the rule will impact an estimated 3.5 million employees and will be especially significant for those in industries like retail, manufacturing, and hospitality.
“As of right now, everybody should be thinking this rule from the DOL, which has gone through the comment period. They’ve signaled that April 1st is going to be the date. You should be prepared for this thing to hit your desk April 1st and be ready to deal with it,” said Vannoy.
Simmons added that a Fair Labor Standards Act audit should be done in the beginning of the year every year, and given this impending legislation, it is especially important that it’s done.
Exempt Status Clarification
Vannoy added clarification that this legislation is for those with the exempt employee classification, or what’s most commonly known as salaried employees (who are exempt from overtime).
“What this is really doing is forcing me to put exempt people as hourly people and better understand what these exemptions actually are for exempt status in the first place,” he said.
Vannoy talked about the compression issue and how the change in pay or status could have a cultural impact where a manager and employee are paid equally, or the previously salaried employee is reclassified to hourly.
Simmons said one of the first projects Asure’s HR Compliance experts tackle with a client is to review job descriptions, which drive exemption classifications. She said correctly and understanding that salary can be the biggest expense, especially for a small employer.
“What we literally will do is we do a full pay roll run and a Fair Labor Standard Act audit, which has a lot of different pieces to it and figure out what’s going to be the cost,” said Simmons. “And I also want to mention that a lot of states minimum wage also goes up in January.”
Non-Compete Condition of Employment
In the past, employers had been able to have a “non-compete” clause in their employment practices designed to prevent employees from leaving the company and going to work for a competitor. The Department of Labor has been ruling against these saying that these non-compete restrictions hinder the employee’s ability to earn a living. While non-competes can still be used, Simmons’ guidance is to work with an HR professional to ensure the clause is presented appropriately.
Retirement Plan Mandates
Simmons discussed how 16 states have enacted 401(k) plans with a dozen more looking to follow suit. Offering a retirement savings plan has value for employers in terms of recruitment as well as tax benefits. Conversely, the fines for non-compliance are hefty.
While some states offer a state plan, there are better options than the state plan, including made-for-small-business plans like the 401(k) plans offered by Asure.
Pay Transparency Trends
Another topic discussed on the podcast was pay transparency, which is mandates in some states but gaining steam as a general philosophy and approach.
“When we’re talking about the world talent and trying to get the best people in the seats in your organization, it does make sense to give the salary range that you’re offering for the position, it’s going to save you time,” Simmons said.
She also noted that this is another area where the job descriptions, interview process and training for hiring managers is key because there are pitfalls surrounding pay transparency and salary questions.
One of the key benefits employers offer is paid leave for things such as maternity leave, bereavement leave, and so on. The laws for various leaves vary by region so this is an area where the policies, employee handbook and guidance to employees should be informed by a certified HR professional who knows and understands the nuances of each leave type and corresponding state legislation.
“When it is a mandated leave, employers need to know when an employee can take it and when they can’t,” said Simmons. “So every leave is not applicable to every situation for every employee.”
While there’s a wave of medical and recreational use laws at the state level, marijuana is still illegal federally. Simmons discussed guidance for policies around cannabis smoking and drug testing. One key area of discussion is off-duty use and the employee protections that prohibit employers from demanding personal use information or social media details.
Scrutiny is on the rise around disability claims. Employers need to be cautious about using any type of physical restriction, including pregnancy, as a reason to change any aspect of the job.
“Here’s what I need everybody to understand,” said Simmons. “Number one, ads and job description should have physical requirements, even if it’s a desk job. And I’m going to say again that your interviewers need to be trained on what they can ask. And your managers have to be trained on how to work with disabilities within the workplace, what they can and cannot say and do when it comes to an employee having a disability.”
Here are the three takeaways employers should taken action on to ensure they’re business is positioned for HR Compliance in 2024:
- Fair Labor Standards Act Audit – review how you’re classifying and paying people
- Employee Handbook Review – review the policies and procedures and how they’re presented at onboarding
- Manager Training – ensure managers fully understand the rules and procedures
For more HR guidance, download our eBook 10 HR Laws Employers Must Know.