More Hot-Button Compensation and Workplace Rules on the Horizon (Part Two)
In a recent article, I described several large and looming regulatory issues that could affect employee compensation and how companies manage their total rewards programs. I wrote about the Paycheck Fairness Act (unlikely to be enacted anytime soon), bans on salary history questions (continuing to gain traction at state and local levels), and new rules concerning EEOC pay data collection (with a reporting deadline of September 30, 2019).
Now let’s look at three more critical workplace and compensation-related issues: proposed minimum wage hikes, changes to the Fair Labor Standards Act’s overtime rule, and “Right to Disconnect” bills. Here is a summary of these issues, including their statuses and trajectories (current as of this writing, but always subject to change), and what’s at stake:
Proposed Minimum Wage Hikes
A decade since the federal minimum wage was last increased (to its current level of $7.25 per hour for most workers), attempts to more than double the minimum wage are picking up steam – with strong pro/con views falling mostly along partisan political lines.
In March, the House Committee on Education and Labor voted 28-20 along Democratic-majority party lines in favor of a bill that would raise the federal hourly minimum wage to $15 by 2024. The bill would also phase out "subminimum" wages for tipped workers, young workers and workers with disabilities. It has not yet moved forward for full House or Senate votes.
Political posturing on both sides of the aisle will likely keep this issue in the forefront for a while, even if a vote remains stalled. In the meantime, more than 30 states have minimum wage rates higher than the federal standards; and local jurisdictions may have higher standards as well. Also, companies such as Amazon, Walmart, McDonald’s, and Google have either come out in support of the increase, raised internal standards for employees and contractors, or withdrawn their opposition to the wage increase proposal. While the debate rages about whether this increase would be beneficial to the economy and employment rates, employers should keep an eye on this as the 2020 election cycle heats up and be prepared to make hard decisions should it be enacted.
Fair Labor Standards Act Overtime Rule
Per the Fair Labor Standards Act (FLSA), employees must be paid 1 1/2 times their regular rate of pay for hours worked beyond 40 in a given workweek. “White collar” exemptions – typically for executive, administrative or professional employees apply for workers earning at least $23,660 annually who also meet applicable duties tests.
The current rule has been in effect for 15 years, but the overtime threshold may soon increase after years of study, debate, rule enactments and federal court rulings that have resulted in a continuation of the status quo. In March of 2019, however, the Department of Labor (DOL) announced its plan to raise the rule’s exemption salary threshold to $35,308. This is roughly midway between the current level and the $47,476 threshold approved by the Obama-era DOL but subsequently blocked by a federal judge. A period for industry comment on the proposal expired in May.
The DOL is required to review and consider comments before finalizing and publishing the new regulations. While this could take several months, it is expected that changes will be enacted by early 2020. Employers should monitor this closely and be prepared to comply with the new thresholds on short notice.
“Right to Disconnect” Bill
The modern communications technologies that have made it possible to stay connected with friends and family also make it possible to be tethered 24/7 to employers and coworkers. Seeking to protect workers who are never “off the clock,” France and Spain have passed “right to disconnect” legislation. Similar regulations have been proposed in the Netherlands and in New York City. The New York proposal would make it illegal for certain city employers to require workers to check and respond to electronic communications during their off-work hours. Exemptions would apply, in particular for “on-call” employees.
While the proposal appears to be stalled for now in New York City, it is likely a matter of time before the issue becomes a top nationwide priority for employers as well as state and federal lawmakers.
While the rollout of “right to disconnect” rules is moving slowly at present, employers would be well-advised to consider internal rules and standards to help ensure that employees can unplug as necessary to avoid potential after-hours work-related stress issues.
Cassandra Faurote is president of Total Reward Solutions, a compensation consulting firm.