In 2016, a myriad of changes to labor and employment law and regulations will have an impact on companies. Why should organizations pay attention to these changes? Local, state, and federal employment laws and regulations all play a role in the management of a compa employees. Whether you are a business owner, CEO or HR professional, you need to be familiar with a wide array of different statutory and regulatory authorities in order to effectively and lawfully deal with your employees.
Some of the changes include:
The play or pay is a concept that requires employers with over 100 FTE employees to provide health insurance to their employees in 2015 (“play”) or pay a tax or premium toward a publicly provided system that covers people without private insurance (“pay”). The ACA play or pay requirement is also referred to as the “Employer Shared Responsibility Provision” or “employer mandate.” In 2016, the “Pay or Play” goes into effect for employers with more than 50 full-time equivalent employees. These companies will be subject to penalties if they do not offer the appropriate health care benefits.
New Family Medical and Leave Act (FMLA)
New forms, notices, and medical certification documents have been released by the Department of Labor. The expiration for these new forms is May 31, 2018. Employers should start to use these forms and here are some links to the new forms:
See the Department of Labor website for additional information–http://www.dol.gov/
Independent Contractor and Employee Misclassification
According to the IRS, misclassified employees are often denied access to the critical benefits and protections they are entitled. Misclassification also generates substantial losses to the federal government and state governments in the form of lower tax revenues, as well as to state unemployment insurance and workers’ compensation funds. Here are some common guidelines from the IRS website to use regarding the degree of control and independence in determining how to classify a potential worker as an employee or contractor include:
- Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
- Financial: Are the business aspects of the worker’s job controlled by the payer? (These include things like how workers are paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
- Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
Exempt vs. Non-exempt Classifications
The Department of Labor (DOL) has proposed changes to the salary level requirements for exempt employees established by the Fair Labor Standards Act (FLSA). Although the new rules will not be enforceable until January 2016, in order to be compliant by that time, it is advisable to start making changes and informing employees about their potential change of status now. In preparation for compliance with the likely-to-be, but not guaranteed, exemption policy changes, companies are encouraged to audit their current employee population.
Employers should consider what their strategy would be for employees whose salaries are close to the line. In some cases, it may be cost effective to raise salaries, and/or bolster an employee’s duties to meet exemption requirements. In other cases, the new standards may require you to change some employees’ status from exempt to non-exempt.
The situations above are only examples of changes in employment law and regulations with which both small and large employers must deal. Ignoring compliance with these ongoing changes puts a company at the potential risk of punitive fines and employee lawsuits. Companies must find ways to remain informed about changes in employment law and regulations, as well as workplace issues and practices that will affect the way they manage their employees. This is just as critical as following proper accounting rules and regulations in closing the company’s financial books at year-end.