As 2020 dawns, employers should ask themselves if they’re ready to face the New Year. 1 January 2020 brings mandatory regulations both nationwide and locally. Most notably, effective 1 January, the Fair Labor Standards Act (FLSA, the federal wage/hour law) will raise its salary test to the ‘white collar’ exemptions to approximately USD 35,000 per 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 a new decade starts, employers are assessing the next wave of labour and employment laws and regulations they will face in 2020 and beyond. However, before the New Year begins in earnest, 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, we would like to remind employers about certain changes they should consider as the New Year arrives.
1. Confirm employee headcount
Due to the frequent changes in US laws, both on a national and local level, modifications 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 apply to employers with 15 or more employees).
2. 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 24 September 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 USD 23,660 per year (USD 455 per week) to USD 35,568 per year (USD 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 USD 100,000 per year to USD 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% of the standard salary level.
3. Ensure vacation and sick leave carryover
As employers finalise 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 as ten employees. From 1 January, 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.
4. 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.
5. 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 1 January 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.
6. 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 USD 100,000 per year are also void beginning 1 January 2020. Additionally, Washington has enacted a regulation creating a presumption that any agreement lasting 18 months or more is considered unenforceable.