Welcome to the latest edition of AlphaStaff's Monthly Compliance Updates!
We are pleased to provide you with national and state legal updates and highlight resources provided by some of AlphaStaff’s trusted legal partners to guide and help keep you in compliance.
U.S. Department of Labor Finalizes Independent Contractor Regulation
The U.S. Department of Labor's final rule, published on January 9, 2024, introduces a significant shift in defining "independent contractors" under the Fair Labor Standards Act (FLSA). This rule replaces the 2021 regulation, adopting a six-factor test based on "economic reality" to determine if a worker is an employee or an independent contractor.
Significant Changes and Implications for Employers:
- Six-Factor Test: The new rule emphasizes factors such as the worker’s opportunity for profit or loss, the degree of permanence of the relationship, and the nature of the worker’s control over the work. It moves away from a rigid framework, adopting a "totality of the circumstances" approach.
- Legal Compliance: Crucially, the final rule states that control exercised by a potential employer for compliance with specific legal requirements does not automatically classify a worker as an employee. This allows businesses to adhere to legal standards without impacting worker classification.
- Investments and Tools: The rule refines how investments by the worker and potential employer are assessed. It is not a direct comparison of the amounts invested but a look at the nature of investments. Additionally, the cost of tools and equipment assessed by the employer will not count towards independent contractor status.
- Profit or Loss and Specialized Skills: The ability to earn more by working more hours under certain conditions may indicate independent status. Specialized skills alone do not determine independent contractor status; it is how these skills are applied in a business-like initiative.
Employers should note that this rule significantly deviates from previous guidance and the 2021 rule. Reviewing and updating classification policies in light of these changes is crucial. The ongoing lawsuit regarding the 2021 rule's delay and withdrawal could impact the new rule, but until then, this rule is the standard for Department audits and compliance actions. AlphaStaff will continue to monitor developments and provide updates.
Click here to learn more from our partners at Littler.
OSHA's New Electronic Recordkeeping Rule Takes Effect
The Occupational Safety and Health Administration’s (“OSHA”) new workplace safety rule became effective on January 1, 2024, introducing significant changes in recordkeeping and reporting requirements for various employers.
Key Aspects of the Safety Rule:
- Expanded Electronic Submission Requirements: Establishments with one hundred or more employees in certain high-hazard industries must now electronically submit detailed injury and illness records (Forms 300 and 301) annually, in addition to the Form 300A summary.
- Updated Classification System: The rule updates the system for determining industries covered by the electronic records submission requirement.
- Continued Obligations for Mid-sized Establishments: Those with 20-249 employees in certain industries must continue to submit their Form 300A summary electronically.
- Unchanged Requirements for Large Non-Hazardous Employers: Establishments with 250 or more employees outside designated industries must submit Form 300A electronically.
- Company Name Inclusion: Submissions to OSHA must now include the company name.
- Privacy and Online Posting: OSHA will not collect certain personal data but plans to post establishment-specific, case-specific information online.
Employers should evaluate if their establishment is subject to the new requirement and update recordkeeping and reporting systems accordingly. These updates signify a heightened focus on workplace safety, particularly in high-hazard industries. Employers should act promptly to ensure compliance and safeguard their workforce.
Click here to learn more from our partners, Fisher Phillips.
California Employers Must Develop a Workplace Violence Prevention Program Under New Law
California's new law requires non-healthcare employers to develop a comprehensive Workplace Violence Prevention Plan (“Plan”) by July 1, 2024. The plan must be detailed and easily accessible to employees, including methods for identifying and correcting unsafe conditions, an occupational health and safety training program, and procedures for employee participation. Employers must provide regular training on the plan, including reporting incidents and workplace-specific hazards. Additionally, the plan must align with California's existing safety and health standards, including communication systems, periodic inspections, and providing access to workplace injury reports.
California employers should act promptly to comply with these requirements before the deadline. This includes creating comprehensive prevention plans, ensuring proper training, and maintaining detailed records to meet the new legal standards.
Please follow this link to learn more from our partner, Fisher Phillips.
California Releases COVID-19 Isolation and Testing Requirements
In response to recent public health guidance, Cal/OSHA has updated its COVID-19 Prevention Non-Emergency Regulations, affecting California workplace isolation and testing protocols. Employers should be aware of the following key changes:
- Updated Definition of “Infectious Period”: The infectious period for symptomatic COVID-19 cases now begins 24 hours before symptom onset. Symptomatic individuals can return to work after 24 hours without a fever and with mild or improving symptoms. Asymptomatic cases have no defined infectious period but follow the criteria for symptomatic cases if symptoms develop. This is a significant shift from the previous guideline.
- Reduced Isolation for Asymptomatic COVID-19 Cases: Asymptomatic COVID-19 cases are no longer required to isolate for five days. Instead, they must wear masks for 10 days and avoid contact with high-risk individuals.
- Revised Testing Rules for Close Contacts: The new guidance recommends testing only for close contacts who show COVID-19 symptoms, are at higher risk of severe disease, or have been in contact with high-risk individuals. Employers must still provide free testing during the paid time for employees after a close contact.
- Continued Testing During Outbreaks: Testing is still mandatory for all close contacts during an outbreak and for everyone in the exposed group during a major outbreak. Symptomatic employees refusing to test must be excluded from work.
Despite several changes, many obligations remain unchanged for employers. Specifically, employers must continue to draft updated COVID-19 Prevention Policies, notify employees and contractors after close contact, and facilitate face coverings as required.
Employers should update their COVID-19 prevention programs to reflect these changes, focusing on revised isolation and testing protocols and prioritizing health and safety in the workplace.
Please follow this link to learn more from our partner, Fisher Phillips.
California Increases Computer Software Employees and Physicians Overtime Exemption Rates for 2024
In California, employees must meet specific criteria to be exempt from overtime regulations. The most common exemptions are for executive, administrative, and professional roles, which require the employee to engage in certain types of work and meet a minimum salary threshold. This threshold is usually at least double the state's minimum wage for a full-time (40-hour) schedule.
For some exempt categories, such as certain computer software employees and licensed physicians and surgeons, the Department of Industrial Relations adjusts the minimum salary based on the California Consumer Price Index. For instance, under Labor Code section 515.5, exempt computer software employees must be "primarily engaged in intellectual or creative work" that demands "discretion and independent judgment," be "highly skilled," and be involved in activities like programming and software design. From January 1, 2024, the minimum hourly rate for these employees will be $55.58, with a monthly salary of $9,649.96, amounting to an annual salary of $115,763.35.
Similarly, Labor Code section 515.6 mandates that certain licensed physicians and surgeons receive a minimum hourly rate to be exempt. Starting January 1, 2024, this rate is set at $101.22. Employers should review these regulations and ensure compliance with the updated salary thresholds to maintain exemption status for eligible employees. This includes adjusting compensation structures where necessary to meet new standards, particularly for computer software employees, licensed physicians, and surgeons.
To read more on this topic, click here.
Chicago City Council Delays Paid Leave Changes to July 1, 2024
The Chicago City Council has postponed the implementation of the new Paid Leave and Paid Sick and Safe Leave Ordinance (the “Ordinance”) from January 1, 2024, to July 1, 2024. This delay provides employers extra time to adjust their paid time off programs. Key points of the amended Ordinance include:
- Paid Sick Leave Accrual and Carryover: The increased sick leave accrual rate of 1 hour per 35 hours worked is now effective July 1, 2024, instead of January 1, 2024. The current rate of 1 hour per 40 hours remains until June 30, 2024. Changes to carryover provisions are also deferred to July 1, 2024.
- Paid Leave Accrual: The start date for paid leave accrual under the Ordinance is pushed to July 1, 2024.
- Impact on Collective Bargaining Agreements (CBAs): The Ordinance does not alter any valid CBAs in effect on July 1, 2024. Post this date, Ordinance requirements can be waived in a CBA if explicitly stated.
- Medium Employer Partial Payout Extension: Medium employers (51-100 employees) have an extended deadline until July 1, 2025, for paying out unused accrued paid leave upon employee separation or transfer.
Additional amendments include:
- Definition of a Covered Employee: Now defined as an individual working at least 80 hours within any 120-day period within the City's boundaries. Once this threshold is met, the employee remains covered for the duration of their employment.
- Written Policy in Primary Language: Employers must provide their written paid time off policy in the employee’s primary language.
- Recordkeeping for Non-Covered Employees: Employers must maintain records for employees working within Chicago's geographical boundaries, even if they are not covered under the ordinance.
- Prerequisites for Paid Leave Private Right of Action: Employees can only initiate a civil action after a violation occurs and after the next payroll period or 16 days post-violation, whichever is shorter. This prerequisite expires on July 1, 2026, and does not apply to paid sick leave violations.
- Policy Notice Requirements: Employers must provide employment policies in the worker's primary language and give a 14-day notice for any policy changes.
Employers should stay updated with the Chicago Office of Labor Standards for further guidance. This delay allows for better preparedness and compliance with the amended provisions of the Ordinance.
Click here to read more from our legal partner, Littler.
Colorado Pay Transparency Amendments Go Live January 1, 2024, Requiring Application Deadlines and Post-Selection Notices
Starting January 1, 2024, Colorado employers must comply with new amendments to the Equal Pay for Equal Work Act (EPEWA), introducing significant changes to enhance transparency and ensure equal pay. These amendments include mandatory application deadlines in job postings and notification requirements for new hires or promotions. Employers must announce all job opportunities, including remote positions, to Colorado employees on the same day before making a hiring decision. These postings should detail salary range, benefits, application deadline, and application methods. Employers can use online or hard copy methods for notification, ensuring accessibility for all employees.
After selecting a candidate for a job opportunity, employers must inform Colorado employees who will regularly work with the new hire about the selection. This includes sharing the new hire's name, previous and new job titles, and how to express interest in similar opportunities. This requirement applies to any hire or promotion company-wide that affects Colorado employees.
Promotions categorized as 'career progression' or 'career development' are exempt from job posting requirements. However, 'career progression' promotions still require the disclosure of advancement criteria and compensation details to eligible employees.
Exceptions include employers with fewer than fifteen remote Colorado employees, who are only required to include remote job opportunities in their notices. Immediate hires for Acting, Interim, or Temporary roles ('AINT' roles) and confidential replacements are also exempt from certain requirements.
Employers should prepare for these changes by implementing application deadlines in job postings and establishing a system for disseminating post-selection notices to Colorado employees. They should also assess promotions under the amended law to determine if they fall under the 'career development' or 'career progression' categories.
In conclusion, these amendments aim to enhance job transparency and fairness in hiring and promotion processes, requiring employers to adapt their practices to ensure a fair and transparent workplace environment.
Tip Pooling in Kentucky
In Kentucky, the expanding culture of tipping has led numerous employers to explore the idea of a tip pool. This approach is seen as a method to mitigate rising labor costs while remaining compliant with wage and hour laws. Employers now face the decision of whether to establish a tip pool and how to do so within the legal framework, especially considering the state's recent legal adjustments that offer more flexibility in how tip pools are managed.
Employers must navigate several key considerations when setting up a tip pool, including whether the tip pool will be mandatory, or voluntary or whether a tip credit should be used. These decisions directly impact the relative administrative burden and employee participation.
Eligibility for the tip pool is strictly regulated; owners, managers, or supervisors are legally excluded under both federal and Kentucky law. The method of tip distribution should align with the business's service model. This could vary from allocation based on hours worked to percentage distribution, depending on the nature of employee interactions with tipping patrons.
Consulting with employment counsel is recommended to ensure effective navigation of these considerations and to help draft a proper tip-pooling agreement, thus maintaining compliance and preempting future disputes or confusion.
Please follow this link for more details.
Massachusetts Revises Paid Family and Medical Leave Guidance to Provide More Discretion to Employers
The Massachusetts Department of Family and Medical Leave (“DFML”) has introduced new guidance that significantly impacts how employees can use their paid leave to supplement Paid Family and Medical Leave (“PFML”) benefits. This change became effective on November 1, 2023, for employers in Massachusetts.
Previously, employees could not receive PFML benefits if they were using accrued paid leave. However, the new law now allows employees to use their employer-provided paid leave to "top up" their PFML benefits so that their total income does not exceed their individual average weekly wage (“IAWW”). The IAWW is calculated based on the employee's earnings in the two highest-earning quarters of a defined period.
Initially, DFML stated that using employer-provided paid leave was at the employee's discretion, leading to challenges for employers, including the administrative burden of calculating the correct top-up amounts. Further complicating matters is how the DMFL defines IAWW because it is not tied directly to the employee's current salary or earnings.
In December 2023, the DFML issued revised guidance to clarify unanswered questions. The new FAQs clarify that using paid leave to top up PFML benefits is subject to the employer's policy terms. This means employers can now decide if and how their employees can use paid leave to supplement PFML benefits, provided the policies are non-discriminatory and comply with PFML regulations.
This is a significant development for employers because it allows more control over how their leave policies interact with PFML benefits, potentially reducing administrative complexities and ensuring policy alignment with the amended law. Employers should review and update their leave policies in light of this new guidance to ensure compliance and optimal employee benefit utilization.
To read more on this topic, click here.
Guidance Interpreting Minnesota's New Earned and Safe Time Law
As highlighted in the November 2023 AlphaAdvisor, Minnesota’s new Earned Sick and Safe Time (ESST) law, effective since January 1, 2024, brings significant updates to sick leave policies statewide. The Department of Labor and Industry (DLI) recently released a revised FAQ Guide, a YouTube video, and a slide show presentation to clarify these changes.
- Employee Eligibility: Employees working at least 80 hours per year in Minnesota qualify, regardless of their or their employer’s location.
- Accrual of ESST: Employees accrue one hour of ESST for every 30 hours worked in Minnesota, up to a maximum of 48 hours annually. This accrual starts from the first day of employment.
- Usage Limits: Employers can limit ESST usage to a minimum of four-hour blocks. However, the increment used must be the smallest trackable by the payroll system.
- Employer Requirements: Employers must inform employees of their ESST rights, including accrual rates and usage procedures. This information should be included in employee handbooks and earning statements.
- Pay Rate for ESST: ESST should be paid at the employee’s regular hourly rate or an average rate for varied compensation structures.
- Prorating and Frontloading Options: Employers can frontload ESST but cannot prorate it. New hires may be placed on an accrual system initially, then switched to frontloading in the following year.
- Interplay with Other Leave Policies: An existing paid leave policy must be at least as generous as the ESST requirements to be compliant.
- Insurance Coverage: Employers must maintain insurance coverage for employees on ESST leave, similar to when they are working.
Employers in Minnesota need to take proactive steps to ensure compliance with the new ESST law.
Please click here for more details.
Washington State Wildfire Smoke Rules Impose New Employer Requirements
With the growing concern of wildfires in Washington, the state has implemented new wildfire smoke regulations effective January 15, 2024, to protect employees from the hazards of wildfire smoke. Recognizing the harmful chemicals and particles in wildfire smoke, these regulations require employers to treat wildfire smoke as a standard job site hazard and ensure compliance.
Employers must Implement the following:
- Develop a Wildfire Smoke Response Plan (WSRP): As part of their Accident Prevention Plan (APP), employers must create a WSRP before work starts in areas with air quality index (“AQI”) issues. The WSRP should address health effects, symptoms, rights for medical attention, requirements of the regulations, methods to determine particulate levels, and instructions for respirator use and maintenance.
- Employee Training: Employers must conduct annual training for employees on the WSRP. This includes the elements of the WSRP, effective implementation, expectations, and proper use of personal protective equipment in case of high wildfire smoke levels. Supervisors must receive additional training on implementing regulations, responding to symptoms of smoke exposure, and emergency medical procedures.
- Monitoring Air Quality: Employers must monitor air quality on job sites where PM2.5 levels are 20.5 µg/m³ (AQI 69) or higher using various sources like the Washington Department of Ecology website, Air Quality WA mobile app, and direct-reading particulate sensors.
Compliance with these new regulations is crucial for Washington employers, given the state’s position that employers have a duty to protect employees from the hazards of wildfire smoke while working.
Please click here for more details.