While the word “compliance” isn’t specifically in “Human Resources,” anyone with their PHR or SPHR will tell you that it’s a massive part of the job. Compliance issues make up a large chunk of most of the HR function and can impact everything from recruiting to outplacement. Compliance laws and guidelines can vary based on state legislation, industry, federal rule changes, and sweeping societal changes like the #MeToo movement. They can impact all parts of a business.
It can be difficult for HR Leaders to stay up to date and prioritize the issues and changes they should pay attention to. And not understanding compliance obligations is not a legal defense. Fortunately, at MammothHR, we stay on top of compliance and regulatory news to keep our clients informed and prepared to address potential challenges resulting from new and revised regulations and laws. Here’s what you should know about compliance issues today.
Wage & Hour Laws
What it is: The Fair Labor Standards Act (FLSA).
What it means: Unless exempt, employees covered by the Act must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rate of pay.
Limitations: There is no limit in the Act on the number of hours employees aged 16 and older may work in any workweek.
Exceptions you may not know: The Act does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest unless overtime is worked on such days.
The Act applies on a workweek basis. An employee's workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. The workweek need not coincide with the calendar week and may begin on any day and at any hour of the day. Different workweeks may be established for different employees or groups of employees.
Averaging of hours over two or more weeks is not permitted. Normally, overtime pay earned in a particular workweek must be paid on the regular payday for the pay period in which the wages were earned.
If you are having trouble calculating time and a half for your workers, here is a coefficient table to help you do so. Some states have their own overtime requirements, so we recommend that you check the overtime laws in your state.
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Family Leave Laws
What it is: The Family and Medical Leave Act (FMLA) provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also requires that their group health benefits be maintained during the leave.
What it means: FMLA is designed to help employees balance their work and family responsibilities by allowing them to take reasonable unpaid leave for certain family and medical reasons. It also seeks to accommodate the legitimate interests of employers.
Who it applies to: FMLA applies to all public agencies, all public and private elementary and secondary schools, and companies with 50 or more employees. These employers must provide an eligible employee with up to 12 weeks of unpaid leave each year for any of the following reasons:
- For the birth and care of the newborn child of an employee;
- For placement with the employee of a child for adoption or foster care;
- To care for an immediate family member (i.e., spouse, child, or parent) with a serious health condition; or
- To take medical leave when the employee is unable to work because of a serious health condition.
What you may not know: Time taken off work due to pregnancy complications can be counted against the 12 weeks of family and medical leave. Employees are eligible for leave if they have worked for their employer at least 12 months, at least 1,250 hours over the past 12 months, and work at a location where the company employs 50 or more employees within 75 miles. Whether an employee has worked the minimum 1,250 hours of service is determined according to FLSA principles for determining compensable hours or work.
Harassment Prevention (increase in regional laws requiring training)
What it is: Post-#MeToo movement, a number of states (and New York City) now mandate workplace sexual harassment prevention training.
Which areas are affected:
- California: The law applies to California employers with 5 or more employees (used to be 50). Sexual-harassment-prevention training is required for all workers by Jan. 1, 2020, and every two years thereafter. SB 778 later extended this deadline to Jan. 1, 2021.
- Connecticut: Covers employers with 50 or more employees.
- D.C.: As of 2018, D.C. law requires employers to provide sexual harassment training to their tipped employees and managers.
- Delaware: Employers with at least 50 employees must provide “interactive training and education to employees regarding the prevention of sexual harassment,” and employers (with 4 or more employees) must issue an information sheet on sexual harassment.
- Maine: Applies to all workplaces with 15 or more employees.
- New York: New York’s training laws apply to all employers regardless of size. The training requirements apply to all employees working any portion of their time in New York, even if they’re based in another state. Employers must (i) implement the State’s model sexual harassment prevention policy, or create their own sexual harassment prevention policy that meets or exceeds certain minimum standards; (ii) make a complaint form available for employees to report sexual harassment; and (iii) conduct interactive sexual harassment prevention training annually, either using the state’s model training materials or another program that meets the training requirements. Training must be completed for all employees every year. See New York (N.Y. Lab. Law § 201-g).
- New York City: Applies to employers with 15 or more employees in the previous calendar year. Independent contractors count toward this threshold.
Independent Contractors vs. Employees — avoiding misclassification
What it is: Business owners must correctly determine whether the individuals providing services are employees or independent contractors and must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.
How to find out: The IRS and the DOL each have their own test. The IRS uses a three-part test to determine whether an individual should be classified as an employee or contractor, looking specifically for facts related to the degree of control the employer has over the worker. To determine whether a worker is an employee or an independent contractor, the Department of Labor will apply the "Economic Realities Test” to determine the underlying economic reality of the situation and whether the individual is economically dependent on the supposed employer.
What you may not know: There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors that are relevant in one situation may not be relevant in another.
How it affects you: If you misclassify an employee as an independent contractor, an employer will owe up to three years of back taxes on the misclassified employee’s wages, in addition to fines and interest. They will also owe back unemployment and workers’ compensation insurance. And they may also owe premiums on other state-run insurance programs, such as paid family leave.
In addition to money owed to government entities, employers will also owe misclassified workers two to three years of back pay for any work they did that was not compensated at applicable minimum wage and overtime rates, as well as liquidated (extra) damages equal to that amount. Finally, in states that have their own minimum wage, overtime, or employee classification laws, the employee will likely be able to sue and recover under both state and federal law. There may also be hefty attorney fees on top of the costs described above.
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Drugs & Alcohol in the workplace — including marijuana
What it is: Employers may hold substance abusers to the same standards as any other similarly situated employees. Employers may:
- Prohibit the use and possession of illegal drugs in the workplace
- Prohibit working while under the influence of illegal drugs or alcohol
- Develop, implement and administer workplace substance abuse and drug/alcohol testing programs, subject to ADA, OSHA, and state workplace testing and other applicable laws
Why you have to be careful: Disability laws protect qualified individuals with a disability from employment discrimination and require reasonable accommodation of protected-status employees. Those laws also specifically protect individuals who are “regarded as” disabled, whether they otherwise qualify for protection. While alcoholics may be qualified individuals with disabilities, illegal drug users, aside from state law medicinal marijuana scenarios, are not protected.
What you may not know: There is no requirement for most private employers to have a drug-free workplace policy of any kind. The exceptions to this are federal contractors and grantees, as well as safety- and security-sensitive, and certain regulated industries and positions.
Which federal regulations to consider: The other category includes laws designed to protect the basic civil rights of American workers. These statutes provide special legal protections to certain kinds of employees. The most important federal laws and regulations of this type to consider are:
- The Americans with Disabilities Act (ADA) of 1990
- The Civil Rights Act of 1964
- The Family and Medical Leave Act (FMLA) of 1993
- The National Labor Relations Act (NRLA) of 1935
Of course, compliance is more multifaceted and complex than these five issues. Ensuring you provide a safe and compliant workplace is just one of the things Mammoth can support in your organization. Contact your broker or payroll vendor to find out if they make Mammoth solutions available to help you stay on top of common compliance issues as well as new state and federal changes to HR statutes and laws.