HR Regulations Are Changing in 2020: Are You Ready?

Jan 16, 2020
| David Pearson, Senior Vice President, HR & Organizational Development
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The new year introduces significant changes in the area of human resources law, on both the federal and local level. Rules are tightening, regulatory scrutiny is intensifying, and non-compliance penalties continue to pose serious threats to small and medium-sized businesses.
 
Below is a list of the most important regulatory requirements taking effect in 2020 that may have a serious impact on how you manage human resources.
 

TALENT ACQUISITION             

New Jersey Restricts Salary History Inquiries
Per bill A1094 ACS, starting January 1, 2020, New Jersey-based employers may no longer screen applicants based on prior salary history, including wages, salary of benefits. Employers are also restricted from inquiring about an applicant’s prior salary (including prior wages, salary, or benefits) when deciding to hire or when negotiating compensation.   
 
What it means for you: Conduct extensive research into the going rates for similar positions in your industry. Prepare to make an offer based on what your organization can allot, not what candidates have earned in the past.
 

PAYROLL/TAX

Minimum Wage Requirements
21 states and municipalities have adopted sweeping legislation to increase workers’ minimum wage. Tri-state businesses will feel the impact as New York enacts their final push toward $15/hour in most jurisdictions, Pennsylvania increases to $8/hour beginning July 1, and lawmakers wrestle with New Jersey’s minimum wage legislation, which continues to hang in limbo as of last November.
 
What it means for you: Your company will see this change reflected in your bottom line, which may impact your staffing decisions. Pay particular attention to seasonal staff-ups that could hit your organization hard. Budget accordingly.
 
Federal W-4 with State Tax Adjustment
A revamp of withholdings on the 2020 form W-4 replaces withholding allowances with a 5-step process and new Publication 15-T (Federal Income Tax Withholding Methods) to determine employee withholdings. The IRS has posted a series of 2020 W-4 FAQs that can help you field questions from employees.
 
What it means for you: Since not all employees will be required to use this form (only those hired in 2020 and employees who wish to make withholding changes in 2020), you’ll need to keep straight who is required to use which form. If you use payroll software or a PEO services partner, they will handle this automatically on your behalf.
 
FLSA’s New Rules on Calculating Rate of Pay (Jan 15, 2020)
In updates to the Fair Labor Standards Act (FLSA) definition of the regular rate of pay, employers now have greater flexibility in which perks they include in an employee’s “regular rate of pay.” Regular rate of pay is in turn used calculate overtime premiums.
 
What it means for you: The new rule adds more clarity and thus reduces liability for employers. Since exclusion of certain perks including parking benefits, gym access and unused paid leave – are now concretely defined, you can have more confidence in how perks will affect an employee’s regular rate of pay.
 

HUMAN RESOURCES COMPLIANCE

NJ Bars Mandatory Arbitration
Though signed into law in March 2019, New Jersey’s ban on mandatory arbitration of all employment discrimination, harassment, and retaliation claims is something to remember, heading into the new year and beyond. As part of the law, retaliation against an individual who refuses to sign is prohibited.
 
What it means for you: If it has been awhile since you have reviewed your standard employment contract, now is the time. If your PEO services partner manages your employee contracts, they have almost certainly already made this update, but it makes sense to confirm changes with them.
 
Non-Compete Enforcement 
Several states have enacted new laws that limit the enforceability of noncompete agreements against low-wage employees. Maine prohibits all noncompete agreements for employees who earn wages at or 300% below the federal poverty line. Maryland rules out noncompetes for employees who earn equal or less than $15/hour, or $31,200 per year. New Hampshire voids all noncompete agreements for employees earning less than 200% of the federal minimum wage or, for tipped workers, New Hampshire’s minimum wage.
 
What it means for you: Once again, review your contract packages and remove all noncompete language for low-wage workers.
 
NY Paid Family Leave Benefit
New York has updated the state’s Paid Family Leave benefits, increasing the rate of pay to 60% of the employee’s average weekly wage. Additionally, workers who provide farm labor in the state of New York will also now receive coverage.
 
What it means for you: Funding for New York Paid Family Leave benefits may be paid by employees through withholdings. Talk to your payroll provider to discuss how you may want to re-structure your Paid Family Leave policy.  
 
New Jersey Data Breach Notification Law Adjustment
Though this law was enacted at the end of 2019, compliance should be top of mind in 2020 as data and security breaches continue to dominate the headlines. The law expands the definition of “personal information”  to include “user name, email address, or any other account holder identifying information, in combination with any password or security question and answer that would permit access to an online account.”
 
What it means for you: Data security is more important than ever. Secure data storage and employee portals are crucial, not just to preserve your company’s compliance but to protect your reputation. Consider partnering with a PEO whose shared services provide you access to leading enterprise HR software at a fraction of the cost of maintaining it yourself.
 
Multi-faceted regulatory changes in the coming year pose risks to employers who are not on top of their game. Nuances that vary by state add complexity, creating more work and opening up further potential to unwittingly slip into non-compliance. Therefore, small- to medium-sized businesses who lack the resources to manage these changes are advised to partner with a professional employer organization or other outsourced HR provider whose expertise can alleviate stress and mitigate liability.
 
Working with a professional employer organization protects your business from undue compliance risk. Contact our HR experts today to discuss how we can help you.