Each month, we round up all of the latest regulatory changes HR professionals need to keep up-to-date on their own policies and procedures. This month, we’re covering the recent Supreme Court rulings, updates from the Department of Labor and ICE, as well as changes from Colorado, Indiana, Illinois, Minneapolis, Maryland, New Jersey, New York, and Pennsylvania.
We do our best to monitor all of these changes, but always be sure to check with your legal counsel. There may be potential discrepancies, contact your local government and/or competent local legal counsel for further advice.
Federal Regulatory Changes
Fluctuating Workweek Method Now Allowed When Calculating Overtime Pay for Nonexempt Workers
Model Notices for Health Insurance Marketplace Options Expire
U.S. Supreme Court Rules to Continue DACA Program
DOL Releases New Opinion Letters Addressing FLSA Compliance Issues
State Regulatory Changes
Colorado Prohibits Discrimination on the Basis of Hair or Hairstyle Associated with Race
Indiana Bans Employers from Requiring Employees to Have Devices Implanted in Their Bodies
Illinois Amends School Visitation Rights Act
Maryland Employers’ Report on Sexual Harassment Is Due July 1
Minnesota Supreme Court Upholds Minneapolis Sick and Safe Time Law
New Jersey Publishes Notification Poster Regarding Employee Misclassification
State of New Jersey Expands Benefits Under SAFE Act
Suffolk County, New York Bans Use of Criminal History When Screening Applicants
New York State Changes Statute of Limitations on Employment-Related Sexual Harassment Claims
Pennsylvania Clarifies Enforceability of Non-compete Agreements
Federal
Supreme Court Rules That Sexual Orientation and Gender Identity Are Protected Classes Under Title VII
Who: Employers with 15 or more employees
When: Effective June 15, 2020
What: The Supreme Court of the United States ruled that Title VII of the Civil Rights Act of 1964 protects employees from discrimination on the basis of sexual orientation and gender identity. The court specifically included those terms in its definition of “sex” as a protected class. The court also clarified that an employer has violated the law if the decision to fire or penalize an employee is based even in part on sex. The ruling states that, “An individual’s homosexuality or transgender status is not relevant to employment decisions.”
The court stated that an employer’s argument of equal treatment of all genders will not suffice as a defense. Consider an employer that fires an employee for being insufficiently masculine and another for being insufficiently feminine. That action violates the law, even though the employer is treating both groups (men and women) equally poorly. The court said that any punitive treatment of any individual that is based on any expectation related to gender is not allowed.
Though they are not subject to this federal law, employers with fewer than 15 employees must still abide by their applicable state and local anti-discrimination laws.
independent contractors are generally not subject to the same protections as employees under Title VII.
How:
- If you don’t already explicitly state that sexual orientation and gender identity are protected classes in your nondiscrimination policies and your employee handbook, update them to reflect the new law.
- Review your dress code to ensure that employees are allowed to follow the dress code of their identified gender.
- Update sexual harassment–prevention training materials as needed.
- Create a training program to educate HR professionals, managers, and supervisors about the new law and the potential for bias in employment and employee-management practices.
- Education employees about gender expression and gender identity issues as they relate to the workplace.
- Consider the potential future impact of this law on other policies and revise your policies as necessary (e.g., access to gender-restricted restrooms and locker rooms; equal access to employee benefits).
Additional Resources:
Supreme Court of the United States Ruling for Case No. 17–1618, Bostock v. Clayton County, Georgia
IRS Increases PCORI Fee
Who: Employers with self-insured health plans
When: IRS notice effective June 8, 2020; PCORI Fee due by July 31, 2020
What: The Internal Revenue Service has increased the fee that insurers and self-insured health plan sponsors must pay to fund the federal Patient-Centered Outcomes Research Institute (PCORI) trust fund. The fee was raised from $2.45 to $2.54 per person covered by the plan. The fee is due to the IRS by July 31, 2020. The new amount is applicable to plan years that end on or after October 1, 2019 and before October 1, 2020.
The fee is due annually through 2029. Self-insured employers must file the annual IRS Form 720 by July 31 of each year, regardless of their plan year.
How:
- File Form 720 by July 31.
- For the fee due in 2020, calculate the amount due using the new, increased fee of $2.54 per covered person if your plan year ended on or after October 1, 2019, and before -October 1, 2020. – For plan years ending before October 1, 2019 -, calculate the amount due using $2.45 per person.
Additional Resources:
IRS Chart for Determining Applicability of PCORI Fee to Health Coverage Plans
IRS Instruction Page for PCORI Fee
Fluctuating Workweek Method Now Allowed When Calculating Overtime Pay for Nonexempt Workers
Who: Employers with salaried, nonexempt employees who receive a fixed salary and whose hours vary week to week
When: Effective August 7, 2020
What: On May 20, 2020, the U.S. Department of Labor announced that employers will be able to use the fluctuating workweek method to calculate overtime pay for salaried, nonexempt workers in cases where the employees receive a fixed salary and their weekly hours vary. The new rule does not supersede state laws that do not allow the fluctuating workweek method of computing overtime.
The Fair Labor Standards Act requires employers to pay employees who work more than 40 hours per week overtime pay at a rate of 1.5 their base rate. The base rate is calculated as the employee’s fixed weekly salary plus most additional payments, divided by the number of hours the employee worked in that week. Paying bonuses, hazard pay, commissions, and other similar payments does not affect the employer’s ability to use the fluctuating workweek method to calculate overtime, but those payments must be included in the calculation of that week’s base rate.
How:
If you intend to use the new rule:
- Revise your HR, accounting, and payroll documentation as necessary to include the new overtime computation method.
- Update employee-facing documentation as needed to explain how overtime is computed.
- Ensure that covered employees are adequately tracking their time, in order to justify the case for fluctuating hours.
Additional Resources:
Fluctuating Workweek Method of Computing Overtime Under 29 CFR 778.114
Model Notices for Health Insurance Marketplace Options Expire
Who: All employers
When: Expired May 31, 2020
What: The Department of Labor’s model notices that employers use to notify employees of the existence of health insurance marketplace coverage have expired. The notices are English and Spanish versions of “New Health Insurance Marketplace Coverage Options and Your Health Coverage”—one for employers that offer a health plan and one for employers that do not offer a health plan. Employers may use the current notices until revised versions are issued, or until the DOL advises that the expired notices have been reinstated as is.
How:
- Use the current model notices until new revisions are published.
- Watch for notification of updated notices on the DOL website.
Additional Resources:
Guidance on Giving Notice to Employees of Coverage Options; Printable Notices
ICE Extends Flexible Rules for I-9 Employment Eligibility Verification
Who: All employers operating 100% remotely
When: Extended through July 19, 2020
What: In light of the need for continued precautions related to COVID-19, the U.S. Immigration and Customs Enforcement (ICE) announced another 30-day extension of its flexibility in enforcing the “physical presence” requirements related to the Employment Eligibility Verification (Form I-9). The exception allows for remote viewing of identity and employment eligibility documentation until such time as normal operations resume.
The provision applies only to employers operating 100% remotely. If there are any employees physically present at a work location, no exceptions are allowed for the rules governing in-person verification of identity and employment eligibility documentation.
Employers are not required to take advantage of the flexibility in rules and may continue to use standard verification procedures, including the use of agents to complete verification.
How:
- Ensure that you are keeping written documentation of your remote onboarding and telework policies for each employee form whom you the remote inspection option.
- Watch for notification of further extension of the relaxed rules on the ICE website.
- Prepare for the eventual need to inspect in person the I-9 identity and verification documents of all employees that you onboarded remotely. Inspection must be completed within three business days of resumption of normal operations.
Additional Resources:
Press Release Announcing Extension of Form I-9 Compliance Flexibility in Rules
Original Guidance for Flexibility in Form I-9 Compliance Requirements
Form I-9 Examples Related to Temporary COVID-19 Policies
U.S. Supreme Court Rules to Continue DACA Program
Who: All employers with DACA-protected employees
When: Effective June 18, 2020
What: The U.S. Supreme Court ruled that the Deferred Action for Childhood Arrivals (DACA) program will continue. The court found that the Trump administration did not prove its case to terminate the program.
DACA affects approximately 700,000 individuals, sometimes known as “Dreamers,” who were brought into the United States from other countries when they were children. The continuation of the program means they are allowed to stay in the country, continue work, and attend school.
How:
- Watch for news regarding the status of the program. Congress may make it permanent, or the Trump administration may try again to terminate it.
DOL Releases New Opinion Letters Addressing FLSA Compliance Issues
Who: All employers with employees whose employment duties or compensation is as described in the individual opinion letters
When: Issued June 25, 2020
What: The U.S. Department of Labor (DOL) issued five opinion letters that address specific situations related to compensation.
The summaries are as follows (FLSA refers to the Fair Labor Standards Act, and the numerals identify each opinion letter):
FLSA2020-6: A salesperson who travels to different locations to sell products using the employer’s vehicle(s) qualifies as an “outside sales employee” under the Fair Labor Standards Act Section 13(a)(1).
FLSA2020-7: When automobile dealership and automobile manufacturer employees receive payments directly from a third party for work done on behalf of the employer, the payment does count toward the employer’s minimum wage obligation to the employee.
FLSA2020-8: A salesperson who sets up displays and performs demonstrations at various retail locations not owned, operated, or controlled by the employer for the purpose of selling the employer’s products qualifies as an “outside sales employee” under the Fair Labor Standards Act Section 13(a)(1).
FLSA2020-9: Emergency-management coordinators employed by a county government qualify as “administrative employees” under the Fair Labor Standards Act Section 13(a)(1) only under certain circumstances.
FLSA2020-10: This letter is specific to retail and commission sales. Employers must pay overtime, if, at the end of an initial representative period, more than half of an employee’s compensation consist of commissions.
How:
- Determine whether you have any employees who could be subject to these rules. If so, read the opinion letters in-depth to understand whether the circumstances would apply to your business. Then update your policies, procedures, and training programs as needed.
Additional Resources:
U.S. Department of Labor Final Rulings and Opinion Letters
State
Colorado Prohibits Discrimination on the Basis of Hair or Hair Style Associated with Race
Who: All Colorado employers
When: Effective June 25, 2020
What: Colorado enacted the CROWN Act of 2020 to include hair texture, type, and style “historically associated with race” as protected under its racial anti-discrimination laws. The Act applies to the contexts of public education, employment practices, housing, public accommodations, and advertising. The amendment specifically names protective hairstyles, such as braids, locs, twists, tight coils or curls, cornrows, Bantu knots, Afros, and headwraps.
How:
- Review your policies and standards about dress code and appearance and update as necessary.
- Create a training program for HR professionals, managers, and supervisors to educate them about the new policies and the potential for bias in hiring and other employee-management practices.
Additional Resources:
Indiana Bans Employers from Requiring Employees to Have Devices Implanted in Their Bodies
Who: All Indiana employers
When: Effective July 1, 2020
What: Indiana House Bill 1143 prohibits an employer from requiring a candidate for employment or an employee to have a device such as a microchip or RFID tag implanted or otherwise incorporated into that person’s body as a condition of gaining employment, gaining employment in a particular position, or receiving additional compensation or benefits. The definition of “device” is fairly inclusive and includes any acoustic, optical, mechanical, electronic, medical, or molecular device.
How:
- Update your hiring and promotion policies to specify that an employer may not require implantation of a microchip or similar device as a condition of employment.
Additional Resources:
Illinois Amends School Visitation Rights Act
Who: Employers with fifty (50) or more individuals in Illinois
When: Effective August 1, 2020
What: The Illinois Public Act 101-0486, or the School Visitation Rights Act, requires an employer to grant an employee leave of up to eight hours in a school year to attend certain events at an employee’s child’s school (subject to certain restrictions). The amendment includes changes in Sections 15 and 35 of the School Visitation Rights Act that add behavioral and academic meetings as covered events and specify that an employer may not terminate an employee solely due to an employee’s absence related to the covered events.
How:
- Update all policies and procedures, including your employee handbook, to reflect the change in the law.
- Notify managers that termination for absences solely due to attendance at covered events is not allowed.
Additional Resources:
Illinois Public Act 101-0486School Visitation Rights Factsheet
Maryland Employers’ Report on Sexual Harassment Due July 1, 2020
Who: All Maryland employers with 50 or more employees
When: Effective July 1, 2020
What: Maryland employers must report their answers to the required survey questions about sexual harassment to the Commission on Civil Rights by July 1, 2020:
- The number of settlements made by or on behalf of the employer after an allegation of sexual harassment by an employee;
- The number of times the employer has paid a settlement to resolve a sexual harassment allegation against the same employee over the past 10 years of employment; and
- The number of settlements made after an allegation of sexual harassment that included a provision requiring both parties to keep the terms of the settlement confidential.
Employers must also report whether they took employment action against employees who were the subject of a settlement disclosed in the survey.
How:
- Complete the online questionnaire to satisfy the reporting requirement.
Additional Resources:
Disclosing Sexual Harassment in the Workplace Act of 2018
Minnesota Supreme Court Upholds Minneapolis Sick and Safe Time Law
Who: Employers with 6 or more employees
When: Ruling issued June 10, 2020
What: The Minnesota Supreme Court upheld two provisions of the existing Sick and Safe Time law of the City of Minneapolis. First, it said that the city was within its rights to enact paid leave laws, despite the objections of the Minnesota Chamber of Commerce, which claimed that doing so violates state law.
Second, the court upheld the city’s right to govern workers within the city limits, regardless of where the employer is located. The Justice who wrote the majority opinion stated, “If employers send their employees to perform work within Minneapolis, the employers must obey the city’s regulations…”
Sick and safe time accrues at a rate of 1 hour/30 hours worked, capped at 48 hours per year. Employers may limit the amount of unused “banked” hours at 80 hours in subsequent years. Limits can be higher, if an employer chooses, but not lower.
How:
- Review your existing policies to ensure that you are compliant with the law and update as necessary.
Additional Resources:
Minnesota Supreme Court Ruling in Minnesota Chamber of Commerce, et al. vs. City of Minneapolis
Minneapolis Sick and Safe Time Home Page
New Jersey Publishes Notification Poster Regarding Employee Misclassification
Who: All New Jersey employers
When: Poster released in June 2020
What: New Jersey Assembly Bill No. 5843 requires employers to conspicuously post a notice that informs employees and independent contractors about:
- The prohibition against misclassifying employees;
- The definition of employee versus independent contractor;
- Benefits and protections to which an employee is entitled;
- Legal remedies to which misclassified workers are entitled; and
- How to contact or file a complaint regarding possible worker misclassification.
Employers that violate the worker classification law are subject to fines of $250 per misclassified employee upon the first violation, up to $1,000 per misclassified employee for each subsequent violation. The employer must also pay each misclassified employee up to 5% of the worker’s gross earnings over the past year.
How:
- If you haven’t already, post the workplace notification as required.
Additional Resources:
New Jersey Worker Misclassification Poster (11 x 17) (8 ½ x 11)
New Jersey Assembly Bill No. 5843
State of New Jersey Expands Benefits Under the SAFE Act
Who: New Jersey employers with 25 or more employees
When: Effective July 1, 2020
What: The governor of New Jersey approved an expansion of benefits under the Security and Financial Empowerment (SAFE) Act. The SAFE Act previously provided for job-protected unpaid leave for employees who are victims of domestic violence or assault, or when they have a family member who is a victim of same.
The amendment to the SAFE Act:
- Expands the definition of “family member” to match that of the New Jersey Family Leave Act;
- Allows persons eligible for leave under the SAFE Act to apply for wage replacement under the New Jersey Temporary Disability Benefits Law; and
- Revokes the right of employers to require employees to use their vacation days or PTO for this purpose.
How:
- Review your current policies and update them as necessary to maintain compliance with the new provisions of the amended SAFE Act.
- Create a plan for covering potential increases in absences. Consider the budgetary impact and the need for back-up or temporary employees to cover shifts.
- Advise managers and supervisors of the changes in the law and your plan for handling potentially increased absences.
Suffolk County, NY Bans Use of Criminal History When Screening Applicants
Who: Suffolk County employers with 15 or more employees
When: Effective August 25, 2020
What: Suffolk County, New York passed a “ban the box” law that prevents employers from asking about an applicant’s conviction history on a job application. The restriction applies to any type of work, including seasonal, contracted, and temporary work. The purpose is to encourage employers to consider an applicant’s qualifications first and allow for more employment opportunities for people with a criminal history.
Employers still have the right to conduct background checks after the candidate’s first job interview, but they must notify the candidate that the check will be conducted before the employee begins work. “Interview” includes a screening call or phone interview, as well as a face-to-face interview.
There are certain exceptions to the law, such as when the question is authorized by law, when certain convictions prevent employment by law, and for positions in schools, emergency services, and agencies caring for children, the elderly, or disabled persons.
If the applicant does have a criminal history, the employer may not deny or terminate employment on that basis unless there is a direct relationship between the crime(s) committed and the nature of the employment.
How:
- Review your employment applications and remove questions about criminal convictions.
- Advise HR personnel, hiring managers, and persons who conduct interviews not to ask questions about an applicant’s criminal conviction history until after the first interview.
New York State Changes Statute of Limitations on Employment-Related Sexual Harassment Claims
Who: All employers within New York State
When: Effective August 12, 2020
What: As part of a series of changes to its Human Rights Law, New York has extended the statute of limitations for complainants to file employment-related claims of sexual harassment with the New York Division of Human Rights from one year to three years.
How:
- Review your documentation and determine if you need to update any references to the timing of filing of claims for sexual harassment.
- Post the new employee notification regarding changes to the Human Rights Law.
Additional Resources:
New Workplace Discrimination and Harassment Protections
Notification Poster for Changes to Human Rights Law
Pennsylvania Clarifies Enforceability of Non-Compete Agreements
Who: All Pennsylvania employers
When: Effective August 25, 2020
What: The Pennsylvania Supreme Court ruled that non-compete agreements signed by employees after the start of employment are not enforceable unless the employee agreed to the “essential provisions” of the restrictions before starting work. Simply notifying the new employee that a non-compete agreement will have to be signed is not enough.
How:
- If you require one, obtain a signed non-compete agreement before the employee begins work.
- Update your policies as needed to account for the new requirements of the law.
- Train anyone who discusses non-competes with prospective employees to be clear with the candidate about the essential provisions of the agreement and, preferably, to obtain a signed agreement before employment begins.
- If you do ask an employee to sign a non-compete agreement after employment begins, and the employee has not agreed to the essential provisions beforehand, consider offering additional compensation for the restrictions you’re imposing on future employment in order to improve the enforceability of the agreement.
