It’s that time of year again when we all reflect on the past year and resolve to make this year better. 2014 brought a lot of change in the work/employment law arena, meaning that most employers had a busy December and January making sure that they were in compliance with newly enacted employment-related regulations, checking if changes to their workforce present new requirements, and ensuring they have kept up with regular practices. This Court Watch explores some of the new employer requirements as well as reminders to employers of the ten things all employers needed to do in January to make sure their HR house was is in order for the year to come.
1) Comply with Ban the Box
From the outset of this year, Illinois employers with 15 or more employees must comply with the so-called “Ban the Box” law. Employers covered by this law must remove any questions on a job applications that ask about criminal history. Further, employers are now only able to inquire about an applicant’s criminal history after the applicant has completed any interview process. Employers who choose to make this inquiry later in the process must also have a clear plan for how they will use the information obtained.
2) Accommodate Pregnant Employees
Also on January 1, 2015, an amendment to the Illinois Human Rights Act on pregnancy accommodations went into effect. This law requires employers to reasonably accommodate any medical condition due to pregnancy or childbirth of an applicant or full-time, part-time, or probationary employee, unless the employer “can demonstrate the accommodation would impose an undue hardship on the employer.” Employers should have put up new posters in the workplace to reflect this new law, updated their handbooks to ensure this new law is reflected, and trained managers about what types of requests are considered reasonable accommodations covered by the Act.
3) Get Ready for the Affordable Care Act
The Affordable Care Act (“ACA”) was enacted to provide health care coverage to all Americans. In 2015, large employers with 50 or more workers have a responsibility to offer employees health coverage. Notably, the coverage rule does not affect part-time workers, which the ACA defines as those who put in less than 30 hours a week. In order to avoid fines, employers that meet this threshold should ensure it offers employees health insurance coverage. Employers should have contacted their accountant to verify their IRS reporting requirements and ensure they fill out the proper paperwork by the February 15, 2015, which is when open enrollment period closes.
4) Check for any Paid Sick Leave Laws that have Recently Passed in Your State
In 2014, several states and cities, including California, Portland, Oregon, Seattle, Washington, and Newark, New York, have passed laws requiring employers to provide paid sick leave. Employers should check to see if any similar laws have recently passed that would impact your PTO. Further, employers should record the number of employee sick days to accurately determine whether it should be paid or unpaid.
For example, currently in Illinois, there is no law requiring private employers to provide employees sick leave, paid or unpaid, although many employers do grant it as an important employee benefit. However, in January 2014, a bill was introduced in the Illinois legislature called “The Earned Sick Time Act,” which would allow workers in business with 20 or more employees to earn a minimum of one hour of paid sick time for every 40 hours worked, up to two days annually. Workers would be able to use the job-protected time to care for themselves or for an ill family member. This bill is currently before the House Committee on Rules for review.
5) Properly Classify Employees as Employees vs. Independent Contractors
As a business owner, it is important to distinguish between hiring individuals as independent contractors or employees. In October 2014, the US Department of Labor’s (“DOL”) Wage and Hour Division (“WHD”) released its enforcement statistics for fiscal years 2009—2013. As a result of that investigation, it was determined that in fiscal year 2013, more than $83,051,159 in back wages for more than 108,050 workers were misclassified as independent contractors. The employer should look at the IRS and IDES’ definitions of these terms to get a fuller understanding of how these agencies define the terms. Specifically, employers should evaluate the level of control it has over how the work is done, whether the individual is engaged in an independent occupation, business, or profession, and whether the services performed by the individual are performed outside the usual course of business. Employers should then make sure they are paying the proper amount of taxes, filing the appropriate tax documents, and contributing an accurate amount for their IDES insurance. Employers who fail to do this can face significant monetary consequences, such as back pay of unpaid employment and social security taxes, including penalties and interest, and/or an IRS audit on your business.
6) Properly Classify Employees as Exempt or Non-Exempt
Employees whose jobs are governed by the Fair Labor Standards Act (“FLSA”) are either ‘exempt’ or ‘non-exempt’ depending on their salary and the type of work they do. Nonexempt employees are entitled to overtime pay at a rate of one and a half times their regular rate of pay for hours worked over 40. Exempt employees are exempt from overtime requirements. In fiscal year 2013, 77% of recovered back pay awards were from overtime claims. This amounted to more than $130 million for more than 170,000 employees. Employers should ensure that they properly classify their employees as “exempt” or “non-exempt” and pay overtime accordingly in order to avoid liability for unpaid wages, statutory penalties and interest, and associated attorneys fees. Employers must ensure that their definitions of exempt employees are narrowly construed and accurate so as to not violate the FLSA.
7) Assess H-1B Visa Needs
An employer can sponsor a H-1B visa holder, which is a foreign individual within a specialty occupation. Applications for the following year are accepted starting in April of the previous year. For 2015, there were 85,000 H-1B visas available. Applications were accepted starting on April 1, 2014. Within one week, 172,500 applications were filed by employers. Because there is an annual cap on H-1B visas, a lottery was performed to pick the lucky applicants. Therefore, employers who are seeking to sponsor an H-1B visa holder for 2016 should begin the process now in order to get their application submitted by the season’s opening on April 1, 2015.
8) Obtain and Post the Proper Posters
Employers should obtain and post the proper posters that reflect the recent updates to state and federal laws so that employees are aware of their rights. Equally as important, employers should ensure that these workplace posters are displayed where they are easily visible to all employees and applicants for employment.
9) Update Hiring Documents
In light of the news laws, employers should update hiring documents to align with the new laws. For example, to comply with the Illinois “Ban the Box” law, employers should update their job applications and remove any question regarding arrest or conviction history from all job applications.
10) Update your Handbook
Review employment policies and handbooks to ensure that they are in compliance with the new laws. In light of the new laws, employers should update its health insurance policies (if applicable) and pregnancy accommodations practices.