Operations Insights
December 23, 2020

You know what they say about hindsight: The 2020 U.S. HCM compliance year in review

Unprecedented. There, now that that’s out of the way, let’s settle in, avoid using that word, and remember a few of the compliance highlights from a year we’ll be all too happy to forget.

Table of Contents

As I began plotting this article, I thought it would be helpful, or at least amusing, to look back at my previous post predicting the notable HCM trends to watch for the year ahead. All things considered, while my trusty crystal ball failed to mention “COVID-19” (or perhaps it did, but I misinterpreted it to refer to a new streaming video series), I didn’t do so badly.

After all, the U.S. presidential election certainly commanded an unprece… ah, unusual amount of attention on both the national and global stages. And leave, leave, and more leave did turn out to be a significant compliance challenge for the year, though not quite in the expected manner. We even saw employers “embrace new ways in which technology can make the workplace better,” though who knew ring lights, green screens, and creative Zoom backgrounds would take center stage.

As we wrap up the year that felt like five, here are a few of the topics that demanded our attention.

In the calm before COVID…

2020 began, and proceeded, with a smattering of trends and topics from the year before.

For example, we continued to see a steady stream of “ban the box” laws, which generally limit the criminal history information hiring employers can seek from applicants. Among the new laws were provisions in Maryland (which became law despite a gubernatorial veto), Virginia (specifically applied to now-decriminalized marijuana offenses), and some clarifications to California’s existing law, as well as a federal provision that will apply to government agencies and contractors.

Salary history bans—laws that limit wage history information that can be sought during the hiring process—also gained traction. Maryland made an appearance here, as well, though Colorado’s expansive new Equal Pay Law, which takes effect January 1, 2021, commanded the spotlight. Colorado’s law not only prohibits employers from seeking or relying on the wage history of a prospective employee, but it is the first to also require hiring employers to provide pay transparency by proactively disclosing compensation and benefits, or a range of the compensation, in certain job postings.

Meanwhile, a federal pay transparency initiative—the EEO “Component 2” pay data reporting—would not return for the next, or foreseeable, filing year. Yet, just as employers were preparing to put away their pay bands, California stepped in with the nation’s first state pay data reporting law. This law will require covered employers to file a Component 2-style pay data report with the Department of Fair Employment and Housing (DFEH) by March 31, 2021, and annually thereafter.

Leave, the emergency, temporary, supplemental pandemic version

In many states, the peak legislative session—and the stage-setting for the compliance year—occurs in March. Yet, in March 2020, while many of us were binge-watching the latest streaming video series in relative complacency, the pandemic was worsening and emergency legislation—health, safety, fiscal, social, and labor—demanded all remaining time and attention.

On Mar. 11, Colorado became the first state to pass an emergency rule requiring supplemental paid sick leave for COVID-19. The state’s initial rules required employers in specific, high-risk industries to provide up to four days of paid leave to symptomatic employees who were awaiting testing. Over the course of the year, these rules would expand to additional industries, additional leave needs, and eventually grow into a three-part sick leave law, including a permanent paid sick leave accrual, which we’ll discuss further below.

A couple of days later, on Mar. 13, 2020, President Donald Trump declared a national emergency in response to the COVID-19 outbreak. Five days later, the Families First Coronavirus Response Act (FFCRA) passed, creating federal emergency leave entitlements and associated tax credits for COVID-19-related needs. (The Coronavirus Aid, Relief, and Economic Security (CARES) Act would soon follow, clarifying some of these leave details while providing additional economic relief, including stimulus and unemployment payments, tax deferrals, and business grants and loans).

Meanwhile, states and cities continued to act, passing emergency provisions to fill gaps left by the federal measure. Because the federal law did not apply to the largest employers—those with 500 or more employees—and offered exceptions for certain health and emergency workers, states and cities stepped in to clarify how existing leave entitlements applied to the pandemic and/or to provide separate, supplemental entitlements to support employees while reducing presenteeism.

While the individual leave details differed from city to city and state to state, generally the supplemental leave laws offered around two weeks of paid leave specifically to be used for COVID-19 needs, either limited to workers who were not otherwise eligible for the federal leave or running concurrently with comparable, equally generous entitlements.

And, even as 2020 ends, some areas are still expanding leave entitlements for COVID-specific reasons. For example, Pittsburgh, PA, just passed an ordinance providing a supplemental paid sick leave balance for COVID-related needs through the end of the public health emergency.

While most of the COVID-19-specific leave provisions are temporary, a few of the underlying public health leave requirements—for example, Philadelphia’s Public Health Emergency Leave—will stick around to provide a safety net in the event of future health emergencies.

(Note: As of this post, a few California localities, including San Francisco and Sacramento, have extended the expiration dates of their supplemental COVID-19 leave ordinances into 2021. However, it still appears that many of the temporary leave provisions with specified expiration dates of December 31, 2020, including the federal FFCRA, will expire on their given sunset dates. Of course, late breaking emergency and executive extensions could still occur, especially at the state and local level.)

Leave, the other varieties

While emergency pandemic leave provisions dominated the paid leave conversation in 2020, perhaps resulting in fewer “general” paid leave programs, not all new paid leave legislation was thwarted by COVID-19. In fact, the pandemic may have been the tipping point needed for two states—New York and Colorado—to adopt permanent, statewide paid sick leave programs.

As mentioned above, Colorado began 2020 with a limited emergency rule providing up to four days of paid sick leave for select, COVID-symptomatic workers in select industries. By the end of the year, this initiative would expand to become the Healthy Families and Workplaces Act, providing not one, but three distinct leave entitlements: COVID-19 emergency leave, a public health leave supplement to “top up” leave balances in the event of future public health emergencies, and a statewide paid sick leave accrual. The sick leave accrual will provide up to 48 hours of paid sick and safe leave per year beginning Jan. 1, 2021, for employers with 16 or more workers (smaller organizations will have an additional year to comply).

New York told a similar story, beginning the year with COVID-specific emergency leave entitlements, then shifting to a statewide sick leave entitlement that took effect September 30. Employees will be eligible to use accrued leave beginning January 1, and the size of the employer will control the amount of leave and whether it must be paid.

Not to be entirely outdone, the other dominant focal point of the U.S. news cycle—the 2020 election—also brought a few leave changes. The unprec… er, that is, perilous intersection of voting and the global pandemic led New York and Puerto Rico to revisit their existing voting leave entitlements, while Washington, D.C., granted paid leave to vote for the first time.

Yet, the most significant leave change that arose from the election came from, yes, once again…Colorado. Proposition 118, or the Paid Family and Medical Leave Insurance Act (PFMLIA), was a ballot initiative through which voters approved a new state-administered insurance program that will provide partial wage replacement when leave is taken for qualifying family or medical reasons.

Much like the paid family leave insurance programs in Washington, Massachusetts, and Connecticut (which takes effect Jan. 1, 2021), Colorado employers will collect premium payments from employee wages beginning Jan. 1, 2023. (Depending on the employer’s size, employers will cover half of the contribution). Beginning Jan. 1, 2024, these contributions will allow the state to provide partial wage replacement while employees take up to 12 weeks (plus an additional four weeks for certain pregnancy-related conditions) of qualifying leave.

Economic stimulus in the form of wage increases

Despite speculation that the economic struggles brought about by the pandemic would delay or divert minimum wage increases, this largely proved not to be the case. Most scheduled minimum wage increases took effect as expected throughout the year, with another 49+—mostly in California—updating over the shift to the new year.

One standout among these increases is that in Florida, where voters approved Amendment 2, which will incrementally increase the state minimum wage to $15 in 2026.

Some jurisdictions, such as Michigan and Seattle, also provided additional premiums, such as hazard pay for essential workers and minimum rates for gig and transportation network workers.

And, while some states discussed how much workers would be paid, others continued to qualify who—namely, which workers would be covered by wage and hour and other labor laws. Colorado (yes, again) expanded the coverage of their wage and hour laws to now include nearly all employers through a new series of Colorado Overtime and Minimum Pay Standards (COMPS) orders. (Previously, certain industries, such as manufacturing, were exempt from these rules). Similarly, New York reconsidered and limited which employees are eligible for tip credits, phasing out the tip credit for workers covered by the miscellaneous industries wage order. On the opposite coast, California continued to clarify and qualify its controversial worker misclassification bill, AB5. In another voter-decided initiative, Proposition 22, app-based transportation and delivery drivers were defined to be independent contractors, overriding AB5’s application to those workers.

Technology and the Zoom where it happens…

Finally, better—or at least safer—living through technology wasn’t entirely unexpected as 2020 began. After all, the dawn of a new decade seemed to be a prime time to consider the future and the opportunities ahead. Rather, it was the accelerated rate of change—and, to some extent, discovering just how far behind we were—that came as some surprise.

The pandemic certainly led many workplaces to quickly embrace or enhance flexible and remote working options—not only to allow certain employees to continue working safely from their homes (and juggle potential child and family care needs amid COVID-related closures)—but also to allow for better distancing and cleaning protocols to support essential workers who couldn’t avoid physical workplaces. No longer an occasional novelty, videoconferencing tools are now so ubiquitous that Zoom fatigue is a real concern.

From a compliance perspective, the accelerated shift to remote working highlighted questions and concepts that, while not new, had not yet been as top-of-mind as they should have been. For example, the U.S. Department of Labor provided guidance on determining compensable work hours under the Fair Labor Standards Act when employees work away from the primary worksite, as well as whether the “continuous workday” requirement applies when teleworking employees need flexibility throughout the workday. Some states also addressed, or at least considered, how jurisdiction of various labor, business, and tax laws (existing and new) would apply to employees now forced to work from different locations.

As the pandemic changed the needs of the workplace, it also changed the needs of workers. In addition to the needs for flexible scheduling and leave to care for displaced school children and family members, the pandemic changed financial needs. While federal legislative efforts to provide additional fiscal support repeatedly stalled, technology helped bridge some of the gap, facilitating gig work opportunities such as grocery and parcel delivery, as well as the ability to access earned pay on-demand.

What’s ahead?

Despite 2020’s unprece…ah, whirlwind of change, we’ll continue our annual tradition of predicting coming trends and developments for the new year. Watch this space for a future blog post in which we’ll, perhaps cautiously, take a peek into 2021. If nothing else, at least 2021 will symbolize the close of this year.

Read HCM compliance trends for 2021 here and get the latest Canadian compliance blogs here.

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.

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