The seven biggest HCM compliance issues of 2017
2017 was a year of many compliance changes, including overtime rule proposals, auto-IRAs and tax and healthcare reform. There’s much that employers need to be aware of to keep up-to-date with new policies and provisions. From Ceridian’s compliance team, here’s a summary and status of some of the year’s major issues.
Table of Contents
As we wrap up 2017, it is time to reflect on the year’s major compliance issues in the human capital management world. Below is a summary of the important compliance issues along with highlights of where changes took place over the course of the year.
Fair Scheduling Laws
Employee fair scheduling is one of the hottest topics that is sure to continue into 2018. In 2017, many cities passed employee scheduling laws, also called “fair workweek”, “secure”, or “predictable” scheduling rules. The laws cover several topics, but share the same goal: to provide employees in certain industries with more predictable schedules and pay.
As of 2017, five U.S. cities have enacted scheduling laws: Emeryville, San Francisco, and San Jose, California; New York City, New York; and Seattle and SeaTac, Washington. In addition, Oregon was the first U.S. state to pass a statewide scheduling law. Additionally, legislatures in Massachusetts, New Hampshire, New York, and the Chicago, Illinois City Council are currently considering whether to adopt proposed scheduling rules.
While the particular details of fair scheduling requirements can vary across jurisdictions, they often address similar types of employer duties, including:
- Providing estimates of employee hours
- Posting schedules in advance
- Offering scheduling flexibility
- Offering open shifts to existing employees before adding headcount
- Requiring premium pay for schedule changes
- Requiring minimum shift durations and rest periods between workdays
- Requiring workplace schedule postings
- Requiring records retention
To learn more and for tips to reduce the impact the rules will have on your business, check out our previous post from this year about fair scheduling.
Federal Overtime Rule Proposals
Throughout 2017, uncertainty clouded an Obama-era U.S. Department of Labor (DOL) rule that was set to extend mandatory time-and-a-half overtime pay to 4.2 million U.S. workers. The rule would have doubled the maximum salary that workers could earn and still be eligible for overtime pay from $23,660 annually to $47,476.
In August of 2017, a federal judge in Texas struck down the rule, reasoning the DOL can use a salary test but must base eligibility for overtime pay on a combination of workers’ duties and wages. Later in November, the U.S. Fifth Circuit Court of Appeals halted the litigation over the 2016 overtime rule. On October 30, 2017, the DOL filed an appeal of the federal court decision striking down the rule. Despite this appeal, we anticipate that the DOL will move forward with the rule-making process, part of which has started with a Request for Information (RFI) issued earlier this year with a comment period expiring in September of 2017.
The RFI sought feedback on:
- Should there be multiple salary thresholds by employer or state?
- Should there be different salary thresholds for executive, administrative and professional exemptions?
- Should there be automatic updating of the salary threshold on a periodic basis?
- What actions have employers already taken in anticipation of a rising salary threshold?
The biggest question on everyone’s minds is whether and how much the salary threshold will be raised under any new rule. Some employers believe that the $47,476 number was on the high end. At his confirmation hearing, DOL Secretary Alexander Acosta indicated that he was open to a more appropriate salary level “somewhere around $33,000.”
For more on this issue, check out our previous post from this year about the federal overtime rule proposals.
Pay Equity/Salary History Inquiries
Regulations about pay equity and restrictions and salary history inquiries were trending in 2017. California expanded its Fair Pay Act in 2016 to prohibit pay discrimination based on race or ethnicity for substantially similar work. Massachusetts and Oregon also recently passed equal pay laws that will go into effect in 2018 and 2019, respectively.
In addition, an increasing number of states and cities are trending toward making it unlawful for private employers to screen prospective employees based on their salary histories, or to request this information as a condition of being interviewed for employment. In 2017, California, Delaware, Massachusetts, and Oregon passed such legislation, along with the cities of New York City and Philadelphia. We also saw similar legislation proposed at the federal level.
For more information, read our earlier post covering burning questions about equal pay and salary history inquiries.
Background Screening Restrictions: Ban the Box Trend Continues
Consistent with the past five years or so, ban-the-box legislation continued to see movement at the state and local legislatures. Connecticut, Hawaii, Massachusetts, Minnesota, New Jersey, Oregon, Rhode Island and Vermont adopted some form of ban-the-box requirements in 2017. Several large cities, such as New York City, Philadelphia, San Francisco, and Seattle also followed suit.
Here are some common themes trending across ban-the-box legislation:
- Many jurisdictions delay the employer’s inquiry about criminal history until after a conditional offer of employment is made, until the employer has conducted the first interview or until the applicant is otherwise selected
- Many jurisdictions prohibit the use of any arrest history to make hiring decisions
- In some jurisdictions, employers must obtain written consent and provide a copy of the report
- Some laws limit employers from asking applicants about certain first-time offenses
- Certain laws distinguish between public and private employees
To learn more on making sense of federal and state requirements on background screening restrictions, check out our earlier post.
In 2017 we saw states begin trending toward the creation of Auto-IRA programs for employees to increase individual retirement savings. Auto-IRA laws require employers without an existing retirement plan to automatically enroll employees in a state-run retirement program.
Oregon issued final regulations this year for its state-run retirement program called OregonSaves, with rollout to the first wave of employers beginning on January 1, 2018. Four other states have enacted legislation requiring mandatory employer participation in Auto-IRA programs: California, Connecticut, Illinois and Maryland. California and Illinois are currently developing regulations and both plan to use a phased implementation schedule, but neither have published detailed roll-out dates.
Several cities have also started proposing Auto-IRA programs, such as New York City, Philadelphia and Seattle.
For more on what this means for employers, read our previous post about OregonSaves, and check out this post that covers top questions (including those about Auto-IRAs) from our recent November Compliance webinar.
Health Care Reform
We saw a whirlwind of activity in 2017 aiming to repeal, replace, or reform the Affordable Care Act (ACA). Although the Republican legislative efforts (including the AHCA and BCRA) hit dead ends, other channels will continue to shape the future of health care reform in 2018.
For a refresher of the various proposals to reform the ACA and what the future may hold for employers, read our previous posts here.
Sweeping tax reform legislation made headway in Congress this year, with H.R. 1, the Tax Cuts & Jobs Act of 2017 (TCJA) passing the U.S. House of Representatives and the U.S. Senate. There are additional steps that must be completed before the bill becomes final, such as reconciliation of the bill language between the House and Senate, a formal vote, and signature by the President. Despite this, employers should be prepared for tax reform to take place before the end of the year, with most tax cuts taking effect January 2018.
For additional HCM compliance content, visit Ceridian’s Compliance Center.
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.