As 2019 winds down, employers should ask themselves if they’re ready to face the New Year. January 1, 2020 brings mandatory regulations both nationwide and locally. Most notably, effective January 1st, the Fair Labor Standards Act (FLSA) – the federal wage/hour law – will raise its salary test to the “white collar” exemptions to approximately $35,000/year. The federal Department of Labor (DOL), which is tasked with enforcing the FLSA, predicts 1.3 million currently exempt employees will be reclassified as nonexempt next year by its final rule
Additionally, many states have enacted paid leave, background check, drug testing, and non-compete legislation in the last year. As the year draws to a close, employers are assessing the next wave of labor and employment laws and regulations they will face in 2020 and beyond. However, before the New Year begins, employers should be sure to review overall state and federal compliance with respect to employee headcount, job classifications, compensation, paid leave, posting requirements, employee handbook language, and employee agreements.
As a result, FordHarrison would like to remind employers about certain changes that employers should consider while completing their end of the year holiday checklists.
Confirm Employee Headcount: Due to the frequent changes in U.S. laws. both on a national and local level, changes in an employer’s business may impact the regulations that apply to it. For example, if an employer has added workers in other states or reached 50 or more employees, it may have to comply with a completely new set of requirements. Employers should count their total number of employees to determine what laws apply to them. Significant milestones to cross are 15, 20 and 50 employees (for example, the Family Medical Leave Act applies to companies with 50 or more employees, Age Discrimination in Employment Act applies to private employers with 20 or more employees, and Title VII and the Americans with Disabilities Act applies to employers with 15 or more employees).
Job Classifications and Compensation: Job responsibilities, essential functions, and compensation can change throughout the year. Employers should assess whether employees are properly classified (non-exempt vs. exempt). On September 24, 2019, the DOL raised minimum salary requirements for overtime exemptions for executives, administrative, and professional employees. Under the final rule, the salary level for these “white collar” exemptions will increase from $23,660 per year ($455 per week) to $35,568 per year ($684 per week). The final rule will also raise 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 also should note that the highly compensated employee rule allows employers to use nondiscretionary bonuses and incentive payments and commissions paid at least annually to satisfy up to 10 percent of the standard salary level.
Ensure Vacation and Sick Leave Carryover: As employers finalize employees’ leave carry over and calculate available vacation, they should also be sure to review local and state laws regulating paid leave come 2020. 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 companies with as few 10 employees. Come January 1, Nevada employers with 50 or more employees must provide employees with up to 40 hours of paid leave per year for any reason, with very few exceptions. 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. Additionally, 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 to come into effect in the next year.
Verify Posters and Notices: Employers should also verify that they are up to date and have current versions of all the required posters and notices, especially in states and localities with new regulations, which may impose additional posting requirements. For example, New York’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 only two of several new posting requirements with which employers may be required to comply.
Review and Update Policies: Employee handbook policies should reflect your company’s culture, expectations and practices, as well as the current state of employment laws, including those going into effect on January 1, 2020. 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 hairstyles. In addition to amendment of nondiscrimination policies, anti-harassment, and dress code requirements, employers should also consider reviewing their grooming policies for prohibitions against natural hair, styles, and textures, since such prohibitions may violate state laws.
Ensure Non-Compete Agreements Comply with Applicable State Laws: Employers should ensure non-compete agreements comply with any applicable state laws. For example, 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 give employees a signed copy of their non-compete agreement no later than 30 days after an employee’s termination. Also, taking effect two weeks after the New Year, 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 year are also void beginning January 1, 2020. Additionally, Washington has enacted a regulation creating a presumption that any agreement lasting 18 months or more is considered unenforceable.
Year end is a busy time for employers, but keeping up with these issues can help ensure a smoother start to the New Year.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.