Once again, it’s time for our annual predictions of what to expect in wage and hour law in the new year. From what we can see, 2019 promises to be an eventful year, so without further ado, let’s get to the predictions!
We believe these wage and hour issues will be top of mind for business managers in 2019:
- Overtime regulations back on the table
- Calculating the “regular rate of pay”
- Redefining joint employment
- Changes coming to the W-4
- Predictive scheduling laws
- Minimum wage increases
- Paid sick leave on the rise
Overtime regulations back on the table
You may remember all the buzz in 2016 about the Department of Labor (DOL) plans to revise the threshold for the so-called “white collar” overtime exemption. As I’m sure you recall, this threshold is the starting point for determining if someone is eligible for overtime or if their position may be exempt. Once the salary threshold is met, the position must still satisfy a “duties test” before it can be considered exempt.
Currently, the threshold is set at $455 per week (or $23,660 annually). Most everyone is in agreement that this amount — which hasn’t been updated in over a decade, and is now below the poverty line for a family of four — is too low. However, when the DOL proposed raising the threshold to $913 per week ($47,476 annually), some felt this was too much of a jump all in one go.
In any case, it all apparently became a moot point when in December 2016 a federal court blocked implementation of the new regulations.
However, in the fall of 2018, the DOL announced as part of their regulatory agenda they expect to issue a revised threshold for public comment in March of 2019. Many experts believe it is likely the revised figure will fall somewhere between $32,000 and $35,000 per year. Also, while the original 2016 regulation update made no changes to the duties test, there have been some indications that the 2019 update might include such changes.
Acroprint’s Take: Stay alert and be prepared for some sort of changes in the threshold for overtime, and possibly for revisions to the duties test, as well. There will be a period of time during which the DOL will accept comments from the public, so if you have strong feelings one way or another, be sure to let them know.
Calculating the “regular rate of pay”
The DOL has also proposed changes to the regulations regarding the regular rate of pay.
The regular rate of pay is important because employers must use it to calculate the overtime rate of non-exempt employees. Many employers think an employee’s “regular rate of pay” is simply their standard hourly rate. However, according to the law, the regular rate of pay should actually include any money paid (and the fair market value of goods/services provided) in relationship to employment. Unless the payment is explicitly excluded by statute, it must be included. So the regular rate of pay would include such things as nondiscretionary bonuses, commissions, hazardous duty premiums, the fair market value of lodging or meals provided to workers, etc.
Unfortunately, the DOL has not provided much detail about what the proposed regulations might be. They state their intention is to “provide employers more flexibility in the compensation and benefits packages they offer employees” and “lessen litigation regarding the regular rate.” That sounds good, but without more detail, employers are left up in the air.
In the meantime, the existing regulations remain in effect. Failing to include all appropriate amounts when calculating the “regular rate of pay” for overtime can open employers to significant legal liabilities.
Acroprint’s Take: Keep your eyes and ears open for more information on what might be coming down the pike regarding the regular rate of pay. And make sure you comply with existing rules in the meantime! A robust payroll system will help ensure you properly calculate and document the regular rate of pay so you can prove you paid the correct overtime in the event of a lawsuit or DOL audit.
Redefining joint employment
Both the DOL and the National Labor Relations Board (NLRB) have indicated interest in revisiting the “joint employer” standard. Joint employment can occur when workers are officially employed by one business, but provide services to another — for example, when a company contracts with a temp agency to provide staff.
When both companies exert economic influence over the workers, they can be found to be “joint employers.” This often comes as a shock to managers who think they’re insulating their organizations from wage and hour issues by using a staffing agency to supply their workforce, only to find themselves on the hook for back wages and other issues when their staffing agency doesn’t pay the workers properly.
At present, there are disagreements among various Federal Circuit Courts about the criteria to use when deciding if joint employment exists. In addition, the DOL and the NLRB each have their own criteria. It’s a confusing landscape for employers and employees alike. The hope is that these two agencies can come up with revised regulations that will bring some clarity to the situation.
Acroprint’s Take: Unfortunately, there is no guarantee that any new regulations will make things any easier — or that the DOL and the NLRB will even be able to agree on a definition of joint employment in the first place. Your best bet is the same as it has always been: only work with reputable staffing agencies. For an additional level of protection:
- Track the time of all the people who work on your behalf, regardless of who their official employer is;
- Review your staffing company invoices carefully to ensure that all workers are being paid in accordance with the Fair Labor Standards Act (FLSA);
- Specify in the contract that your staffing agency must comply with other applicable laws and EEOC regulations and refrain from retaliating against employees who exert their rights under the law.
- Ensure your contract includes an indemnification clause, where the staffing agency will bear the liability and pay the costs of defending you in case anyone decides to pursue action against you as a joint employer.
You may also find this article from the law firm of Fisher Phillips helpful: Whiplash: How To Manage During Joint Employer Uncertainty.
Changes coming to the W-4
Thanks to the tax law changes passed in 2017, the W-4 needs considerable modification. But the edits have been delayed due to the complexity of the changes needed, so the 2019 form at present still looks basically the same as the 2018 form. Many state tax authorities are waiting to see what the updated federal form will look like to help them decide if they need to modify their own withholding processes.
With the current government shutdown and the inevitable aftermath, it’s unclear when the necessary changes will be published. When they are, employers will potentially need to obtain updated W-4 forms from all employees, as well as possibly making some changes to their withholding rules in their payroll system.
Acroprint’s Take: Stay alert for notifications of changes to the W-4. In situations like this, it can pay to use a payroll system that automatically incorporates updates to federal and state tax laws. If you are still manually calculating your payroll and withholdings, consider upgrading to an automated system that will ensure your withholdings are up to date with the latest regulations.
Predictive scheduling laws
Lawmakers in many major cities around the country, including New York City, Philadelphia, Chicago, San Francisco, and Washington, DC, as well as the state of Oregon, have enacted regulations limiting or prohibiting “on-call scheduling” and requiring employers to provide advance notice of work schedules to their workers.
Depending on the location, the law can require as few as 72 hours or as much as 21 days advance notice of work schedules; most require two weeks. Some regulations require employers to offer additional shifts to existing workers before they are allowed to bring in outside or temporary help to cover the shifts. Several prohibit scheduling workers for back-to-back shifts and/or mandate a minimum number of hours that must elapse between shifts.
Similar laws have been proposed or are actively being considered in other jurisdictions. We expect this trend to continue.
Acroprint’s Take: If you do business in a jurisdiction that has already enacted scheduling rules, it is imperative that you have access to a robust automated scheduling solution. This will ensure you have planned well in advance for a sufficient number of employees to cover the expected work load. Even if none of your locations are covered by these laws, offering your employees more predictable schedules can help promote employee satisfaction and loyalty, as well as attract higher caliber applicants.
Minimum wage increases
While the federal minimum wage remains at $7.25 per hour, 18 states and at least 20 local governments have increased their minimum wages effective December 31, 2018, or January 1, 2019. While over the past few years several bills have been introduced to increase the federal minimum wage, we do not expect to see significant action on the issue at the federal level in 2019.
In addition, businesses around the country continue to face pressure from their workers, unions and other activist groups to increase their wages above the mandated minimum, with many campaigns focusing on a $15/hour standard.
The Fair Labor Standards Act provides that when there is a difference between the federal minimum wage and the state or local minimum wage, workers are entitled to whichever is higher. If you are doing business in one of these jurisdictions that has enacted a minimum wage higher than the federally-mandated $7.25/hour, you’re responsible for paying the higher state or local wage.
Acroprint’s Take: Smart companies control labor costs as much as possible, while complying with applicable minimum wage laws. For these organizations, handwritten time sheets and paper-based scheduling are not sufficient; robust and flexible automated time tracking and scheduling solutions are essential to ensure adequate staff on hand to cover demand while avoiding unintended overtime.
In addition, for businesses with employees in multiple locations, it’s more important than ever to keep track of local minimum wage rules. If this applies to you, be sure you’re using a sophisticated payroll system with the ability to track employee location and calculate pay accordingly.
Paid sick leave on the rise
Federal law doesn’t (yet) mandate paid sick leave. However, 11 states and the District of Columbia have enacted their own paid sick leave rules. In addition, many cities and counties have stepped in when they decide their state’s provisions are lacking.
We anticipate this trend to continue in 2019, with more state and local governments enacting their own ordinances. For instance, the New Jersey Paid Sick Leave Act went into effect in October 2018. Michigan, Washington, and Westchester County in New York have paid sick leave laws going into effect in 2019.
Acroprint’s Take: If you already offer your workers paid sick leave (whether voluntarily or because mandated by law), it’s important to document your program and keep accurate track of accrued benefits and remaining balances. Accurate tracking and documentation can shield you from legal liability, while offering the benefit in the first place can help you attract a better caliber of employee. While it’s possible to track your program using manual paper-based systems, an automated solution — particularly one that includes employee self-service, allowing your workers to easily request time off and check on their remaining sick leave balance — will save you time, money and headaches in administering your program.
If you are in a location that doesn’t yet mandate paid sick leave and you don’t offer this benefit, it’s still a good idea to have systems readily available to track and pay sick leave. There’s a reasonable chance in the next few years you may find yourself covered by a state or local ordinance that mandates paid sick leave — or you may find yourself having to offer this benefit to remain competitive in the job market — and it will pay to be prepared.
The bottom line
The new year presents challenges, but also opportunities. Prudent business managers will ensure their organizations have the appropriate systems in place to accommodate more accurate scheduling, proper pay calculations, and any other ordinances that might be enacted in their locations.
Fortunately, Acroprint offers a wealth of traditional time clocks and automated systems to satisfy a variety of business requirements. For those who want to make sure they are prepared for any eventuality, our cloud-based AcroTime Workforce Management solution is ideal.
Whether you need to track time for a contingent or temporary workforce, keep track of work hours for mobile or remote workers, streamline the schedules of your part time and “on call“ employees, or simply get a better handle on overtime expenses, AcroTime has got you covered.
Incorporating time tracking and scheduling, payroll, and human resource management tools, AcroTime ticks all the boxes. Since it’s a single-database, single-login solution, you can start with the module(s) you need now and add more later at any time with no hassle. For more information or to schedule a demo, visit the AcroTime website — and have a Happy New Year!
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