Compliance Corner: 2024 HR Trends for the Year!
Wednesday January 31st, 2024
Estimated time to read: 7 minutes, 15 seconds
Welcome to 2024 -- the new year promises to be an exciting time for the Human Resources (HR) world! There are a few standout trends that started percolating in 2023, and we are very interested to see the trajectory. From minimum wage increases to pay transparency laws, there is a litany of changes across the world of HR. This month’s Compliance Corner takes a deep dive into these trending topics.
State and Occupational-Specific Minimum Wage Hikes
Minimum wage increases, along with minimum pay for specific industries for various states and cities, are very prevalent this year. The minimum wage increased in 22 states on January 1st. At least 40 cities and counties have increased their minimum wages. In California alone, at least 27 cities increased their minimum. This year, new laws went into effect in Seattle and New York City bringing delivery drivers up to minimum wage by changing how they are paid.
In April, California will institute a higher minimum wage for fast food workers, and in the same state, a new minimum wage for healthcare workers will go into effect in June 2024.
How does minimum wage apply to remote employees working in different jurisdictions?
When your business is based in one state and employs remote workers in another, the minimum wage laws of the state where the employee is physically working usually apply. This means that if you have remote employees across different states, you must comply with the minimum wage requirements in each specific location where your employees are working.
More States Will Be Enacting Pay Transparency Laws and Amending Their Current Laws
One of the newest, and, at times, most uncomfortable HR trends is pay transparency. The effects of pay transparency laws are already impacting companies, employees and applicants. The Society for Human Resources Management (SHRM) research shows that salary information in a job posting makes 82 percent of candidates more likely to consider applying for the position. Conversely, a lack of this information discourages 74 percent of potential candidates. Employers say that providing pay range information upfront has led to more applicants (70 percent) and more suitable applicants (66 percent) for these roles.
What is pay transparency, and are we prepared to embrace this new trend?
Simply put, pay transparency (or salary transparency/wage transparency) is openly sharing information about compensation with employees and job candidates. What is the objective of pay transparency? Often, it is to help workers and applicants understand a more complete compensation package and to promote ‘fairness’ in compensation.
This practice involves disclosing the salary range for job postings and to current employees upon request. Several states have enacted pay transparency laws with varying requirements in 2023. By the end of 2023, eight states had enacted pay transparency laws (as well as five cities and one county), and at least 15 more were considering pay transparency laws. On January 1, 2024, Colorado enacted updates to their pay transparency law, and Hawaii’s new pay transparency law (and expanded equal pay amendments) went into effect. So, if you do not yet have employees in states with pay transparency laws, you probably will soon!
How does this affect your company and employees?
Unclear salary disclosures can cause internal conflicts within an organization, creating tension among employees – especially if you are unsure how to determine pay ranges and distinguish between higher and lower earners. Pay transparency may seem risky, but it has quite a few perks. Pay transparency helps fight pay discrimination, improves performance, enhances diversity, equity, inclusion and belonging (DEI&B) efforts and aids in streamlining the recruitment process.
Leave Management Laws Will Continue to Evolve
The trend of states passing various types of mandated leave will continue this year. Eight states currently fund state-paid family/medical leave through payroll taxes. Four states have passed legislation for future paid family leave. Three states fund paid family leave with deductions from contributions to private plans.
This month, California expanded its sick leave law (increasing the number of days) and added leave for reproductive loss events, and Colorado’s Paid Family and Medical Leave Insurance program went into effect. In Illinois, new leave laws include the Paid Leave for All Workers Act, expanded child bereavement leave, and blood donation leave is now extended to organ donation. Minnesota’s statewide Sick and Safe Leave went into effect, and paid family leave laws are now amended in Tennessee and Washington. There is new legislation that recently passed in Delaware, Maine, Maryland and Minnesota. New York Governor Kathy Hochul has proposed expanding New York’s paid family leave to include 40 hours of paid leave for prenatal medical appointments.
This is just what is happening now, so definitely look for more legislation on leave to come!
What can you do for your organization right now?
Many of these laws require extensive administration. To start, you can take an inventory of the states where your employees currently live. It is recommended that you consult with your legal counsel or HR professional to ensure that your policies, handbooks and work practices conform to all of the states where your employees work. With various states and jurisdictions, you may need to consider how you are going to modify your policies to comply with the new paid leave requirements and whether you want to only offer these to employees in states where they are required, or if you want to offer some of these leave benefits to all employees in your organization.
Companies Will Be Better Prepared for Workplace Violence
Workplace violence has been a persistent concern for businesses across the United States, affecting employee well-being, productivity and overall organizational success. Beginning July 1, 2024, Senate Bill 553 in California will require virtually all employers to create a workplace violence prevention plan that is in writing and accessible to all employees and provide annual training on the plan to employees. The bill specifies the content of such a plan and includes an anti-retaliation provision for employees who file workplace violence reports.
Even without specific legislation, it is best HR practice for your company to have an Emergency Preparedness Plan and for employees to have basic training in different scenarios that comply with OSHA guidelines. This law is the first of its kind in the United States and signifies important progress in improving workplace safety. It is likely that this legislation will pave the way for other states to consider similar mandates. It will also help give structure to employers who would like to implement a similar safety plan.
What procedures can you put in place to better prepare your employees for workplace violence incidents?
First, it is very important to have commitment from management and active employee participation in this process. This is very important for the success of the prevention program. Other important variables are making sure that the worksite is carefully analyzed to customize the prevention program for your company. All parties involved can work together to find ways to prevent and control potential hazards/violence. It is also important to provide proper workplace violence training to all employees. This can include safety and health training (adding first aid and CPR will always be beneficial).
It is recommended that any program that is put into place has accurate recordkeeping and continuous program evaluation, focusing on developing effective processes and procedures appropriate for your unique workplace. You can obtain valuable resources from your local law enforcement, your HR provider and local organizations that focus on the study and prevention of workplace violence. Often, your state’s OSHA will provide information and programs regarding workplace violence.
The DOL Proposed Rule to Increase the Minimum Exempt Salary Requirements
The U.S. Department of Labor (DOL) proposed raising the federal minimum salary requirement. If finalized, this will increase the minimum salary required to $1,059 per week (currently, $684 per week) for administrative, professional and executive jobs (exempt employees). Whether the DOL meets its April 2024 target release date remains to be seen, but this will significantly impact most organizations!
How would this affect your organization?
Suppose the proposed minimum salary levels are retained in a final rule. In that case, the DOL estimates that, within the first year of implementation, 3.6 million workers would see salary increases or changes in their FLSA classification as a result and that there would be an income transfer of $1.2 billion from employers to employees in the first year, alone. These funds will come from new overtime premiums or salary increases to maintain the exempt status of affected employees. Remember, this is a proposed rule and has yet to be finalized, but it is very likely that there will be some sort of change.
How can you prepare for the possible change?
First, you should identify all exempt employees by title, state and current salary level. Then, track the average hours worked by the exempt employees earning less than $55,000 to assess the impact of this proposed rule. If those employees work less than 40 hours a week, the practical effect of converting the employee to non-exempt may be limited. On the other hand, if those employees work more than 40 hours per week, you may consider cost-cutting strategies, such as reallocating workloads, bringing in part-time or contracted additional support, or reducing less critical work assignments. After this, evaluate options for employees who earn less than the projected minimum salary level. You may need to increase salaries so that affected employees can retain their exempt status, reclassify or reduce hours to avoid overtime, shift work to other employees, or possibly reclassify many employees as non-exempt.
It is important to note that employers must comply with federal and state law requirements for salary thresholds and duties tests. Some states have higher thresholds and more stringent duties tests. Employers should also consider how classification and salary affect restrictive covenant agreements under state law. Some states, such as Massachusetts and Rhode Island, prohibit non-compete agreements for non-exempt employees.
Michigan is Repealing Its Right-to-Work Law in February
Michigan will be the first state in almost sixty years to repeal its right-to-work law. This is that “At-Will” employment statement in your handbook stating that either the employee or the employer can end the employment relationship at any time. This will affect what union contract provisions are enforceable and will not allow employees in union jobs to opt out of paying union dues. It will be very interesting to see if other states investigate, following suit in 2024.
There Have Been Federal Increases for Benefit Contribution Limits and Mileage Reimbursements in 2024
The increases are as follows:
Business Mileage has increased to 67 cents per mile
HSA Contribution Limits: Increased to - Single - $4,150
Family - $8,300
HSA Catch-up Contributions (55 and older) - $1,000
FSA Limits: Increased to $3,200. The carryover amount allowed increases to $640
401K, 403(b), and 457 plan limits: increased to $23,000
401K, 403(b), and 457 catch-up contribution (age 50 and older) remains at $7,500
Big changes are coming to the world of HR in 2024. From new pay transparency legislation to new state leave laws to a potentially substantial increase in the salary threshold for exempt employees, it can be a great deal to manage. Be sure to reach out to your legal counsel or HR team to stay compliant with all of these changes.
Need help navigating the trends of 2024? isolved HR Services is ready to get to work!
About Allison Hitzeman:
Allison Flanders Hitzeman (Ally), MBA, SHRM-CP, OTR/L, CHT, Certification in Compensation Studies, is a Senior Human Resources Consultant. She has several years of experience in the human resources field both as a consultant and a small business owner. She has been a Human Resources Consultant with isolved since 2017. Ally currently resides in Phoenix, AZ with her husband and 2 kids and 2 cats.
Theresa has over five years of experience as an HR expert. She is proud to blend her passion for HR and technology to create a remarkable experience for employers and employees. Collaborating with other HR and tech professionals on a dynamic team is what she finds most rewarding. Theresa is an Orlando native, wife, and mom of two beautiful girls, and doggy mom to her newly adopted dog, Pico.
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