Five Key HR Topics for Businesses to Keep Top of Mind in 2020
There is never a dull moment when keeping up with the evolving HR trends for small and medium size businesses. Each year brings new HR compliance requirements for a business to navigate. Below are key HR topics for businesses to be aware of in 2020, as well as some tips to help employers prepare for the year ahead.
Harassment prevention was a hot topic in 2019 and will continue to be in 2020. California, Connecticut, Delaware, District of Columbia, Illinois, Maine, New York City, and New York State all currently have harassment prevention initiatives and we anticipate that other states and cities will implement requirements in 2020. Harassment prevention legislation have included required postings in the workplace, notices to employees, thorough harassment prevention policies, and harassment prevention training for both employees and supervisors. Illinois has a new training requirement effective January 1, 2020 and Rhode Island, Vermont, and Massachusetts strongly recommend training. Employers should make sure their business follows all applicable anti-harassment regulations and best practices to create a work environment where all employees feel safe and supported. This helps businesses remain compliant while fostering a positive workplace culture. An HR professional or professional employer organization can be instrumental in helping design and implement an effective anti-harassment program.
Mandatory Paid Time Off
Businesses are just beginning to become accustomed to mandatory paid sick leave requirements as paid sick leave laws have been a growing trend in the past years. Now we are beginning to see states expanding this requirement to mandatory paid time off for any reason, not just for being sick. Maine was the first state that passed a law that beginning January 1, 2021, requires employers to provide “earned paid leave” that can be used for any reason. Nevada followed closely behind and passed a similar law that goes into effect on January 1, 2020. Bernalillo County, New Mexico, has enacted the “Employee Wellness Act,” effective July 1, 2020, requiring employers to provide paid time off for employees to use for any reason. We anticipate this will be a growing trend in other states and localities. A competitive paid time off policy is a great tool to attract and retain talent. Employers should look at their current paid time off policies to ensure they are competitive and compliant with local or state regulations.
Paid Parental Leave
Paid parental leave, has been a popular topic for state and local legislation. Currently, the following states have parental leave requirements which provide or will provide employees with paid time off for purposes of bonding with their new child: California, Connecticut, District of Columbia, Massachusetts, New Jersey, New York, Rhode Island, and Washington. This is also a trend where many private employers not subject to any requirements are providing paid leave in support of parental leave. Many companies see the benefit of offering paid parental leave to retain talent and create a strong company culture. Employers should review their current parental leave policies to ensure they are compliant.
Misclassification of Independent Contractors
Companies often engage independent contractors to perform work for their business. This will become much more challenging for companies operating in the state of California. California recently passed AB 5 that goes into effect January 1, 2020, codifying stricter guidelines on the classification of independent contractors. Companies must use an “ABC” test to determine if an individual qualifies as an independent contractor. To pass the ABC test, the company must be able to show the following three items:
A. The worker is free from the control and direction of the company (by agreement and in fact),
B. The worker performs work that is outside the usual course of the hiring entity’s business, and
C. The worker is engaged in an independently established business of the same nature as the work being delivered to the hiring entity.
Part B of the test is complex because it is generally interpreted to mean that a business cannot use an independent contractor to do anything that the business uses employees to do – or that is central to the business regardless.
We anticipate that other states will follow California’s lead in implementing stricter guidelines for independent contractor classifications. Companies should review the independent contractor requirements for their state to ensure that independent contractors are properly classified.
New Overtime Rule
The Department of Labor has announced that effective January 1, 2020, the minimum exempt salary under the administrative and professional exemptions will increase from $23,600 to $35,568 annually. For employees to maintain an exempt status they must be paid a minimum salary and meet specific duties tests. Although the duties tests have not changed, employees making less than $684 a week will be eligible for overtime. Under the new rule, incentive payments, commissions and nondiscretionary bonuses paid on an annual or more frequent basis may be utilized to satisfy up to a maximum of 10 percent of the minimum salary level. Additionally, the new rule increased the salary threshold for highly compensated employees from $100,000 annually to $107,432 annually.
Employers should review employees’ salaries, take into consideration state requirements which may be different than the federal requirements and review the applicable duties tests in order to make sure employees have the proper status.
This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.
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