This is the third installment of our Senior Executive Lookahead blog series.
We are counting down the top five issues that should be on the radar of every human resource and business leader in 2022. We opened the series with Issue One: Executive Branch administrative actions will impact the employee-employer relationship. Our post last week covered Issue Two: Employers will continue to face challenges accessing talent despite increased federal spending.
Today we explore Issue Three: State policies will complicate the changing nature of work.
The marked increase in remote work resulting from the onset of the COVID-19 pandemic created new challenges for employers related to labor, tax and compensation laws at the federal and state levels.
State legislatures continue to be fertile ground for legislation impacting the workplace. The resulting plethora of state laws and regulations can present significant burdens for employers.
In California alone, new laws were recently passed to address nondisclosure agreements, employer obligations to post and distribute information, and wage theft. Additionally, the legislature is considering a four-day workweek.
California is not an outlier. Colorado already requires employers to disclose potential compensation and benefits as part of a job posting, prompting some employers to advertise positions as open anywhere in the U.S. except Colorado. Other states are tackling issues surrounding productivity and privacy concerns for both in-person and remote employees, the use of artificial intelligence in sourcing and hiring applicants, and the classification of contractor or gig workers.
Differing state laws and worker protections can also create liability issues for businesses that operate across state lines. In the wake of pandemic, 30 states enacted liability shields for businesses. Now that some of these laws are expiring, companies may find themselves straddling different liability standards. Companies should also be aware of differing regulations on joint liability for franchisers and parent corporations, burden of proof, rules of evidence, and tort liability.
Compensation and tax rules can also create additional administrative requirements. The Economic Policy Institute reported that, as of January, 30 states and Washington, D.C. have a higher minimum wage than the federal rate. Wages can range from the floor of $7.25 per hour to $15.20 per hour. The differences in compensation will continue to change as some states have provisions that will raise the minimum wage according to the cost of living. Also complicating matters for employers is the fact that nine states do not have a state income tax.
Issues of tax liability extend beyond the borders of the U.S. Increased flexibility benefits and opportunities have resulted in more employees are working abroad. Employees working abroad may incur tax liability without their knowledge. Employers are not always sure where their employees are located, increasing the chance that companies find themselves on the wrong end of U.S. tax liability.
An area of legislation that is ripe for federal uniformity is a workable framework for paid family and medical leave. The Family Medical Leave Act of 1993 allows for uncompensated leave and only covers 56% of the American workforce, according to the Department of Labor. Looking to fill the vacuum of federal inaction, state governments have enacted their own provisions. Currently, nine states plus Washington, D.C. have passed compensated family and medical leave standards, with benefits expected to be phased in.
Additionally, Illinois, Virginia, Missouri, Alabama and West Virginia have proposed their own versions of paid family and medical leave legislation. SHRM is a longtime advocate of a federal paid family and medical leave framework that would work for both employees and employers and would recognize that most of this nation’s workplaces are small and midsize businesses.
How can companies mitigate the duties associated with the patchwork of labor and tax laws? Communicate with employees, managers and HR professionals to proactively identify whether the issues that make a company subject to these provisions are necessary for the business to thrive. In concert with one another, create workable programs, processes and procedures to address compliance while avoiding unnecessary complications. Be innovative by identifying solutions that work for your organization’s culture and assist with the recruitment and retention of employees.
As an advocate for the HR profession, you have a unique and valuable perspective on the changing world of work and how advocacy can make an impact with policymakers and in your workplace. Are you a member of SHRM’s Advocacy Team? Join today or text ATEAM to 52886.
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