To 2020 and beyond: Trends for a new year of U.S. HCM compliance

While the U.S. presidential election is likely to command much of the nation’s attention in 2020, there’s still plenty of room (and a whole extra day) for new activity and trends to watch in the world of HCM. Let’s explore a few of the key trends we’re likely to see in the year ahead.

Begin as you mean to go on: More agency action from the DOL

Kicking the new year off with a long-sought increase to the Fair Labor Standards Act (FLSA)’s minimum salary level for certain overtime exemptions, the U.S. Department of Labor (DOL)’s Wage and Hour Division (WHD) already has at least a few more items on its agenda for 2020.

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To start, the agency has just released new final rules clarifying the “regular rate” of pay used for calculating overtime compensation under the FLSA. These rules, which take effect Jan. 15, 2020, provide additional examples of forms of payment — particularly in terms of perks and benefits — that employers may exclude from calculations of the regular rate of pay. The new rule also addresses discretionary bonuses and slides in a quick update to calculations related to the lesser-used “basic rate.”

But that’s not all. According to the agency’s fall regulatory agenda, we may also see final rules addressing tip regulations, fluctuating workweeks, and an update to section 3(m)’s regulations, which define when employers must include “board, lodging, and other facilities” in wages.

Many aspects of the FLSA’s regulations have not been updated since the law’s initial drafting over 60 years ago. These proposed regulations largely seek to provide needed clarification and sensible updates to better meet the reality and nuances of the modern workplace.

Leave, leave, and more leave

After several consecutive years of leave laws being a hot topic, for 2020 the question is less a matter of whether we’ll see more leave-related legislation and benefits (we will), and more a matter of what a fresh new decade of leave perks will look like.

In 2019 we saw the first “any reason” leave laws, as Maine, Nevada, and Bernalillo County, New Mexico became the first jurisdictions to require covered employers to provide eligible employees with paid leave that can be used for any reason. As I discussed in my 2019 wrap-up post, “any reason” leave is a trend that will likely gain popularity, particularly among jurisdictions that haven’t yet waded into the paid leave patchwork.

We’re also likely to see more states consider paid family and medical leave legislation and/or parental leave benefits. Among the states that have pre-filed paid family, medical, and/or parental leave bills are Florida, Kentucky, Missouri, and New Mexico. Plus, with federal workers likely to receive paid parental leave by October, this may also pave the way for more paid leave discussions at the federal level.

Meanwhile, the DOL’s WHD also has plans for some exploratory work related to the (currently unpaid) federal Family and Medical Leave Act, as the agency may issue a Request for Information seeking suggested improvements to the law for both employees and employers.

Leap into a new year of wage increases

At my last count, 47 states and localities will have increases to their minimum wages at some point in 2020, with many taking effect on January 1. While certainly important from a compliance perspective, minimum wage increases aren’t unexpected enough to warrant a category of their own in an article about new trends for the new year.

A topic that is worth mentioning, though, are the less common state increases to overtime eligibility thresholds — particularly now that a federal minimum salary increase has finally made it through the regulatory process.

Washington State raised the bar in mid-December, 2019, when it adopted regulations that will raise the state’s minimum salary threshold by a multiple of the minimum wage over the next eight years, ending with a projected minimum of $1,603 per week ($83,356 per year). Pennsylvania is also currently considering such an increase, aiming to reach a minimum of $875 per week ($45,500 per year) over two years.

Now that the federal threshold is set, other states — Michigan is another likely candidate — may follow suit with their own, higher minimums in the coming year.

Data privacy and security

Ever the trendsetter, California’s new California Consumer Privacy Act (effective Jan. 1, 2020) has already inspired several other states to pre-file similar bills for their 2020 legislative sessions.

Massachusetts, Minnesota, Pennsylvania, New Jersey, and New York are a few of the states likely to consider their own consumer privacy legislation. If previous efforts are any indication, some of these bills — New York, for example — may have far sharper teeth than California’s, placing more active, nearly fiduciary-level duties on businesses that collect and use residents’ data.

Better living through technology: Perks, policies, and practices

Though our focus in this article has been the legislative and regulatory trends that drive compliance changes, these are far from the only areas of change and growth we’ll see in 2020 and beyond.

With each new year, employers and employees alike encounter, explore, and eventually embrace new ways in which technology can make the workplace better. In the past decade, we’ve seen the idea of the “workplace” undergo unprecedented transformation. While some changes — the open office plan, for example — weren’t for everyone, others — more sophisticated solutions for remote work and distributed workforces — have proven mutually beneficial for many employers and employees alike. The workplace has become more global, more diverse, more collaborative, and generally more flexible. (Of course, some improvements were not without their challenges, too — the “always on” nature of our constantly connected lifestyles, for example.)

The coming decade will continue to bring similar transformations and challenges to our idea of “work,” as well as that of the relationship between employer and employee. Artificial intelligence, machine learning, and alternative work arrangements such as the gig and freelance economies are just a few of the examples of the “new normal” discussed in our new 2020 Future of Work report.

Meanwhile, employers will be able to put technology to work themselves, simplifying their own administrative tasks while responding to workers’ increasing expectations and demands for flexibility and transparency through services such as on-demand pay, self-service scheduling, and sophisticated compensation and engagement analytics.

Want to stay informed as these and other trends come to fruition in the year ahead? Read more HCM compliance and legislation blogs and news on the Ceridian blog, and get the latest Canadian compliance blogs here.

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Disclaimer: The information provided in this post is provided for informational purposes only and should not be relied upon or construed as legal advice and does not create an attorney-client relationship. You should review with your legal advisors how the laws identified in this post may apply to your specific situation.