Facebook pixel

Three Key 2016 Compliance Concerns Driven by 2015 Policy Actions

Tuesday February 9th, 2016

Estimated time to read: 1 minute, 45 seconds

Three very different hot-button HR concerns in 2016 have one thing in common: All three were catapulted into prominence as a result of legal or political actions taken late last year—actions that employers may have overlooked at the time. Here’s a closer look at each one.

Paid Sick Leave

2016 is shaping up as a key year in the growing trend of requiring employers to promise paid sick leave to their employees. Four states—California, Connecticut, Massachusetts, and Oregon—now have sick leave laws (not to mention the District of Columbia and least 22 other major cities and localities). But that total has the potential to more than double this year: Hawaii, Michigan, Minnesota, New Jersey, Pennsylvania, Vermont and Washington all have similar bills pending in their legislatures.

Adding fuel to the fire is an executive order signed by President Obama in September 2015, requiring employers with government contracts and subcontracts to provide paid sick leave to their workers as well.

Business groups oppose these laws because they add to a company's overhead costs and tracking leave is an administrative burden. But the reality is that paid sick leave laws are in effect, and employers should closely review their policies because requirements can vary from state to state—or even from city to city.

Worker Misclassification and Overtime

Labor Department guidance released in July 2015 said most workers are considered employees under the federal Fair Labor Standards Act. David Weil, DOL’s Wage and Hour Division administrator, said DOL wants to limit the misclassification of workers as independent contractors. This could loom large in the increasingly gig-influenced labor market of 2016.

This guidance came on the heels of another DOL proposal that would double the standard salary level required exemption from FLSA overtime regulations for employees—from $455 a week (or $23,660 per year) to $970 per week (or $50,440 per year).

A worker’s status as an employee or an independent contractor affects more than just overtime. Union coverage, benefits eligibility, and payroll taxes are also impacted. If a government audit finds that a worker has been misclassified, the employer could potentially pay a fortune in back taxes and retroactive pay and benefits.

For example, ride-sharing company Lyft agreed in January to pay $12.25 million to its California drivers to settle misclassification claims, and Uber Technologies is headed to trial on a similar issue.

Transgender Worker Discrimination

The proposed federal Employment Non-Discrimination Act, which would prohibit discrimination based on sexual orientation or gender identity, has been introduced in every Congress since 1994 but it hasn't been enacted. However, the Equal Employment Opportunity Commission is making it clear that it can act on its own without waiting for Congress expressly to prohibit employment bias against members of the transgender community.

Last July, the EEOC held that a transgender federal employee could pursue a Title VII claim based on the theory that alleged bias based on failure to conform to gender stereotypes is sex discrimination.

Although EEOC administrative decisions don't cover private sector employment, they do indicate the agency's interpretation of Title VII, which can have persuasive effect when courts consider private-sector claims.