One of the most important functions of any human resources department is keeping up with employment law and adjusting office protocols to work within it. Each of the company's employees is a human being who is entitled to all the protections the law provides. Any mistakes in the adding of hours or handling of medical insurance information, for instance, could severely injure an employee.
Since employment law is very personal to your employees, you can be sure if you make a mistake, there will be consequences. When you multiply the potential claims against your company by the number of people you employ, you understand the size of the potential risk.
To minimize your risks, it is a good idea to review all of your policies each year against the backdrop of any changes in the law. Employment law changes regularly, so being aware of the changes is a good first step.
Although it was signed in 2015, Executive Order 13706 (EO 13706) establishing paid sick leave for federal employees actually goes into effect in 2017. Approximately, 1.15 million workers will get paid sick leave under this rule.
Since about 22% of the American labor force is employed by companies that do business with the federal government, the paid sick leave rule could have a big effect on employees. EO 13706 only applies to new contracts that meet certain specifications detailed in the Final Rule, including:
At first glance, EO 13706 appears to apply to companies that do work for the federal government. However, its reach is broader than that by encompassing concessions contracts, in particular. A company doing business on federal property was granted the right to do so by the federal government through a concessions contract. The business that company does under that contract does not have to pertain to the government at all or federal employees. A company selling food, for example, to tourists on federal land would be subject to the provisions of EO 13706, although their business has nothing to do with the government or federal employees.
By including contracts governed by SCA, EO 13706 covers procurement and non-procurement construction projects. Construction companies doing business under government contracts, whether they are strictly funded by government grants or loans, or whether their construction services are procured by a government entity, are subject to the paid overtime provisions of EO 13706.
There are narrow exclusions to EO 13706, including these types of contracts:
All employees who perform work for or related to the contract are eligible for paid sick leave. Employees who qualify under the Fair Labor Standards Act (FLSA) overtime exemption are not exempt from the paid sick leave provision of EO 13706. Only employees who work in connection with the contract but spend 20% or less of their time on that work are exempt from EO 13706.
Anyone already earning 56 hours of paid sick leave each year as a result of a collective bargaining agreement is exempt from EO 13706 until that collective bargaining agreement expires. If the collective bargaining agreement extends beyond January 2020, EO 13706 will take affect and cover that employee, anyway.
Contracting agencies are responsible for including a paid sick leave clause in all applicable contracts. The agencies are also charged with holding back funds if an employer does not provide the paid sick leave benefit to his employees. Contracting agencies will forward con-compliance complaints against employers to the Wage and Hour Division.
Contractors keep track of the hours worked on a specific contract and track the paid sick leave earned by each employee. Hours on a job may be estimated as long as the estimation is reasonable. At the end of the pay period, or at the end of the month, whichever comes first, employees must be notified about the sick time they have accrued.
Upon separation, employers are required to pay out the balance of accrued sick leave to the employee. If that employee is hired back within 12 months, his accrued sick time must be reinstated if it was not cashed out to him when he left.
The uses for paid sick leave under EO 13706 are clear and include:
Sick leave can be used in increments as small as one hour, as long as it is not impossible to leave and return during a shift. Employers can only limit the amount of paid sick leave by the amount an employee has earned. While an employee is out on paid sick leave, he is still paid his regular wages and benefits, as if he were working. An employee does not, however, continue to accrue sick leave while he is on sick leave.
An employee must make an oral or written request for sick leave as early as possible. For planned appointments, a seven-day notice is requested. An employer cannot deny a request to use accrued sick time based on his workforce or workflow. Any denial of request for sick leave must be communicated in writing with a reason.
Scheduling and compensating employees for overtime can get complicated if you do not have a good tracking system. In a large organization, overtime pay may apply differently to different types of employees. You may have both hourly and salaried workers cooperating on the same project but being compensated based on different metrics.
Establishing an overtime policy that works company-wide is a challenge. As your company grows and changes, what constitutes overtime work may vary and your compensation package will need to be adjusted. Doing this in a way that is fair and equitable to all employees can be difficult.
The federal government stepped in recently to outline some minimum standards for overtime pay, what constitutes overtime work, and who needs to be compensated for their extra time on a job. In the middle of 2016, the Department of Labor finalized updated regulations concerning overtime. The Final Rule was set to take effect on December 1, 2016.
The primary focus of the Final Rule on overtime was defining who is eligible for overtime pay. Previously, salaried workers were expected to work any number of hours for the same compensation. Hourly workers, on the other hand, were paid for each hour they worked, and when those hours exceeded a regular work week, they were to be paid a higher wage.
The idea of salaried workers not earning overtime pay originally came from the idea that they were the executive level employees. At that level, employees were already earning exponentially more than the hourly workers, and they often had a financial stake in the success of the company. Therefore, it seemed logical that a salaried worker would put in as many hours as it took to complete the job without looking for more pay.
In recent years, some employers found a way around paying overtime to their employees by making people who do not perform executive level functions salaried, rather than hourly, workers. Keeping these employees at the same income level as their hourly predecessors, but paying them on a salary basis, meant that any extra time required to complete the job did not garner additional pay.
The Final Rule sought to remedy the inequities in this system by changing the definition of exempt employees. The new standards set by the Final Rule include:
This new rule effectively increased the threshold for exemption from overtime pay from $455 a week to $913. It also increased the minimum salary requirement for HCE from $100,000 to $134,004. Beginning in 2020, those minimum standards will be automatically updated by using the percentages and recalculating the average nation-wide salaries.
Just before the effective date of this Final Rule, a federal judge blocked its implementation with an indefinite injection. The new overtime rule was challenged by at least 21 states with claims that Congress never intended the overtime rules to be so specific or to update automatically.
The Department of Labor filed a notice to appeal the injection, which was granted by the court. The timeline for hearing the appeal, however, is not clear. There is some speculation that the change in administration set for January 20, 2017 could delay this process. For now the injunction stands, and there is no official word on when, or if, the Final Rule will go into effect as written.
In the meantime, many employers have made changes to their payroll to accommodate the provisions of the Final Rule. Although there is no way of knowing if these provisions will ever be required, it is clear that some public sentiment is moving in the direction of equalizing standards between executive and non-executive workers. Some employers choose to try to keep ahead of these changes.
2017 could be the year the Final Rule takes effect, therefore, it is a good idea to be prepared to make the changes necessary to bring your organization into compliance. Depending on the number of employees you have, it could take some time to calculate how many changes you would need to make and how they could ultimately affect your bottom line.
Federal employment law sets a minimum standard for companies to abide by. On top of that, states have the right to make laws that are more restrictive. It is a good idea to start by reviewing these upcoming changes to federal employment law for 2017:
Employment law changes frequently, and this review of the upcoming changes for 2017 and beyond points to the fact that more, not fewer, changes will be coming each year. You'll want to develop a system that can easily accommodate changes to keep you from losing time and money.
Having a comprehensive, yet flexible, system in place for employee scheduling that can also help you track sick leave, overtime, and other important details can make your job easier moving through changes in employment law. Orbital Shift offers software that does that and more.
Review Orbital Shift's software and features, including:
Orbital Shift also handles all of your reporting needs, from Workers' Comp to weekly payroll. It even includes employee communications like time-off requests, late clock-in alerts, over budget alerts, and other standard and custom messages.
Most importantly, Orbital Shift has an easy-to-use interface and can be updated frequently. Our scheduling features, for instance, make it easy to change or duplicate schedules quickly. Updating your protocols is a matter of simply adjusting the features ad parameters for each employee or for a whole group at one time.
There is a lot of uncertainty in this year of administrative transition, and employment law will continue to change for the foresee-able future. Let Orbital Shift help you organize employee scheduling and stand by you through the upcoming changes.