Author: Megan Butz

Megan joined Checkwriters in 2020 and is responsible for reviewing, revising, and implementing internal policies of the company, advising on human resource, employment, and labor matters, and monitoring and publishing state and federal legal updates to the Checkwriters News and Compliance Center for distribution to thousands of clients around the country. Before joining Checkwriters, Megan served as a judicial law clerk for the justices of the Massachusetts Probate and Family Court performing legal research and writing, followed by private practice in Cape Cod.

December 4, 2023

Colorado Family and Medical Leave Insurance Program (FAMLI): Employees may begin Applications; Benefits available January 1, 2024

Colorado is the latest state which will begin paying out family and medical leave benefits for eligible employees in the new year. Under its Family and Medical Leave Insurance (“FAMLI”) program, eligible employees may begin their applications now for anticipated leave in 2024 in the My FAMLI+ online portal, which Coloradans will use to apply for benefits, submit required serious health condition forms, review claims status and manage their benefits.

Under the program, employees are entitled to up to twelve (12) weeks of paid leave across a rolling annual calendar year for a qualifying reason with the possibility for leave to be extended to sixteen (16) weeks for a serious health condition related to complications from pregnancy or childbirth. Benefits will become payable effective January 1, 2024.

Key details for Colorado employers:

private sector employers in Colorado must provide paid family and medical leave to their Colorado employees, whether through the state-run plan or through a private plan which provides equal or greater benefits and protections.
Employers must post the required Program Notice telling their employees about FAMLI benefits and employee rights and duties thereunder. Employers must also provide a copy of the notice to all remote employees.
Employers will use the FAMLI+ Employer portal to manage their FAMLI accounts.

How is FAMLI determined?

Employer and employee contributions are based on 0.9% of wages. Recently, the FAMLI program provided clarifying guidance on the new definition of wages subject to the FAMLI premium. FAMLI “wages” will mean “gross wages” and will include typical employer compensation. Examples of gross wages include:

Salary
Hourly wage
Overtime
Tips
Bonuses
Commissions
Piece rate
Employer-provided paid leave (PTO, sick, vacation, etc.)
Disability benefits paid by the employer and not by a third-party
Parental leave paid by the employer and not by a third party
The value of lodging or meals used as a credit toward the minimum wage.

Exclusions from the definition of wages include:

Severance payments
Employer contributions to, or payouts from, a deferred compensation plan
Profit-sharing
Pensions or retirement plan payments
Expense reimbursements (mileage, travel, moving, per diems, etc.)
Non-monetary payments (except lodging or meals to the extent they’re used as a credit toward the minimum wage)

This definition will become effective January 1, 2024 and will be used to determine FAMLI premiums and benefit amounts.

How is FAMLI headcount determined?

Employers may determine their employee headcount by calculating the number of employees on their payroll for a total of twenty (20) or more calendar workweeks in the preceding calendar year.

Employers must report their headcount to the Division of Family and Medical Leave insurance upon initial registration, and then annually thereafter.

This headcount is used to determine whether the employer will be subject to the employer share of the FAMLI premium.

What is the employer contribution for FAMLI?

Employers with ten (10) or more total employees nationwide (please see state guidance on how to count nationwide employees) are required to contribute 0.45% (employer’s share) of an employee’s wages, with the employee contributing the other 0.45% via standard payroll deduction.

Employers with less than ten (10) nationwide employees are not required to pay the employer share.

For employers with a nationwide workforce, employers are only required to pay premiums for those employees who are localized in Colorado.

What are the eligibility requirements and qualifying reasons for FAMLI?

In order to be eligible for paid leave, employees must have earned at least $2,500.00 during the previous five (5) quarters.

Qualifying reasons for leave under the FAMLI program include the following: parental bonding leave (birth, adoption and foster placement), medical leave to care for an employee’s own serious health condition, medical leave to care for a family member’s serious health condition, qualifying exigency related to a family member being on active duty, and for certain purposes related to an employee or the employee’s family member experiencing domestic violence, harassment, sexual assault, or stalking.

How can employees use FAMLI, and what are the benefit amounts?

Employees are not required to utilize earned paid time off before taking leave under the FAMLI program, but may choose to supplement or “top off” their benefit with accrued paid time off in order to receive the full amount of their customary weekly wage while on leave. Wage replacement benefits will be paid at a rate of 90% of the employee’s average weekly wage with lower wage earners receiving a higher percentage. Benefits are calculated on a sliding scale using the individual’s average weekly wage for the state of Colorado. The maximum benefit amount is presently capped at $1,100 per week.

Please visit the Colorado Division of Family and Medical Leave Insurance for additional information and resources for employers including FAQS, information regarding private plans, leave eligibility, and how-to videos regarding how to register, how to manage the FAMLI + Employer account, and how to apply for self-insured or carrier-insured private plans, among other things.

Disclaimer: The information contained herein is not intended to be construed as legal advice, nor should it be relied on as such. Employers should closely monitor the rules and regulations specific to their jurisdiction(s) and should seek advice from counsel relative to their rights and responsibilities.

December 1, 2023

EEO-1 Component 1 Data Collection: Deadline For Filing December 5

The U.S. Equal Employment Opportunity Commission (EEOC) announced that the annual EEO-1 Component 1 data collection for 2022 data opened Tuesday, October 31, 2023. The EEO-1 Component 1 report must be filed by Tuesday, December 5, 2023.

What is the EEO-1 Component 1 Report?

The EEO-1 Component 1 report is a mandatory annual report required of all private sector employers with 100 or more employees (and federal contractors with 50 or more employees meeting certain criteria). The report contains workforce demographic data including job categories, sex, and race or ethnicity.

EEO-1 Component 1 Instructions

For EEO-1 Component 1 instructions, employers should review the dedicated EEO-1 Component 1 website for employer resources and additional information including the 2022 EEO-1 Component 1 Instruction Booklet, and 2022 EEO-1 Component 1 Data File Upload Instructions.

The EEO-1 Component 1 Report must be electronically submitted through the EE0-1- Component 1 Online Filing System (OFS). Employers have the option of manually inputting the data into the OFS portal, or uploading a data file containing the workforce demographic data by using the data file upload specifications.

Beginning October 31, 2023, the EEO-1 online Filer Support Message Center (help desk) was available to assist filers with any questions regarding the 2022 data collection.

The 2022 instruction booklet has been redesigned to consolidate existing filer-support materials such as FAQS and fact sheets into a single resource, while also including additional clarifying information on reporting requirements. It is the EEOC’s hope that the updated instruction booklet will serve as a “one-stop-shop” for new and returning filers.

Next Steps

Employers should periodically check the dedicated EEO-1 Component 1 website for collection updates and supplementary resources as they become available, and stay ahead of the Tuesday, December 5, 2023 EEO-1 Component 1 filing deadline.

Did you know that you can run the EEO-1 Component 1 Report in Checkwriters?

Remember, employers subject to EEO-1 Component 1 Data Reporting include private employers with 100 or more employees, including non-profits. You can run this report in Checkwriters for upload to the agency portal.

For more information on how to run the EEO-1 Component 1 Data report in Checkwriters, check in with your Client Support Specialist or refer to the EEO-1 Tutorial on the Checkwriters Knowledge Base.

November 22, 2023

Massachusetts Paid Family and Medical Leave Updates: New “Top-Off” Rules, Contribution Rate Increase, and Maximum Weekly Benefit

There are several 2024 updates regarding the Massachusetts Paid Family and Medical Leave Law. These include new “top-off” rules (which allows employees on PFML to supplement their weekly PFML benefit with their accrued PTO); employee and employer contribution rate increases; and an increase to the maximum weekly benefit.

What are the Massachusetts PFML “Top-Off” Rules?

The Massachusetts Department of Family and Medical Leave (DFML) has announced the enactment of new legislation providing for employees to “top-off” or supplement paid family and medical leave benefits with available or accrued employer-provided paid time off (“PTO”) such as vacation, sick or personal time up to the employee’s individual average weekly wage (“IAWW”). The ability to “top-off” or supplement an employee’s PFML benefits applies to all claims filed after November 1, 2023.

Additional guidance is expected from the DFML in the coming months. In the interim, employers can consult a series of FAQS published by the Department on its website.

How is an Employee’s Individual Average Weekly Wage (IAWW) Calculated?

An employee’s IAWW is calculated from the amount an employee earned in the last four completed calendar quarters before the start of the employee’s benefit year. The IAWW is the average amount the employee earned per week in the employee’s two highest quarters, or if the employee worked two or less quarters, the one quarter where the employee earned the most money.

This figure will be calculated by the DFML and provided to Leave Administrators in the employee’s leave approval notice, along with the employee’s PFML benefit amount. Please see a sample approval letter where this information can be located provided by the DFML:

Employers Must Have a “Leave Administrator” Registered with the DFML

It is imperative that all employers have a Leave Administrator registered and on file with the DFML. If an employer does not have a Leave Administrator then it cannot access this information. The DFML reminds employers that “[b]eing actively engaged in managing your employees’ leaves is essential to being compliant with PFML’s statutory and regulatory requirements and ensuring that your employees get the amount and duration of leave for which they are eligible.”

Employers should take this opportunity to verify that they have a current and correct Leave Administrator on file with the DFML. Employers may find information on managing their employer account including granting access to a Leave Administrator on the DFML website.

Leave Administrators may calculate an employee’s eligible “top-off” amount by subtracting the amount of the PFML benefits from the employee’s IAWW. This is the maximum amount an employee may use to supplement their PFML benefit. Employers are responsible for ensuring that employees do not exceed their IAWW with a combination of available or accrued PTO and their PFML benefit.

How Does PTO Affect an Employee’s Eligibility for Benefits?

Utilizing PTO will not affect an employee’s eligibility for benefits, nor will it affect the amount of benefits to which an employee is entitled. Employers are not required to report the PTO “top-off” to the DFML. While employers must permit employees to utilize available or accrued PTO to supplement their PFML benefits during eligible periods of leave if they choose, employers may not require employees to do so.

For employees with claims filed prior to November 1, 2023, they are not eligible to utilize the new “top-off” guidance. Employees with applications filed prior to November 1, 2023, may continue to utilize PTO during the seven (7) day PFML waiting period only. For employees who file claims on or after November 1, 2023 for retroactive leave that began before November 1, 2023, so long as the application is filed on or after November 1, 2023, these employees are eligible to use PTO to “top-off” their PFML benefits during eligible periods of leave.

Employers should inform their employees of the option for them to use available or accrued PTO to supplement their PFML benefit while they are on leave up to their IAWW. For employers who have a private plan exemption from the DFML, private plans are also required to allow for “top-off” or supplementation of employee PFML benefits.

What are the Massachusetts PFML Contribution Rates for 2024?

The DFML has released its FY 2023 Annual Report which is available on the Commonwealth DFML website. Coinciding with this release, the DFML also examines and evaluates contribution rates for the coming year. While in years past the contribution rate has decreased, effective January 1, 2024, the combined contribution rate for employees and employers will increase from 0.63% of eligible wages to 0.88% of eligible wages.

For those employers with less than twenty-five (25) employees who are not required to contribute to the employer share of the medical contribution, the employee contribution rate will increase from 0.318% to 0.416%.

Employers with twenty-five (25) or more employees are required to contribute to the employer’s share of the medical leave contribution which represents 60% of the total contribution (0.42% of eligible wages) with the other 40% of the medical contribution (0.28% of eligible wages) being withheld from a covered individual’s wages. Employers may contribute to the family leave contribution for their employees, or may withhold the entire amount (0.18%) from their employees’ eligible wages.

Individual contributions are capped at the Social Security taxable wage base which will increase to $168,600.00 for 2024.

Increases to the contribution rate can be attributed to increased usage of the program from FY 2022 to FY 2023. According to the FY2023 Annual Report for the Massachusetts Paid Family and Medical Leave program, there was an 27.39% increase in approved applications over FY22, and a 37% increase in total benefits paid between FY22 and FY23, with the DFML paying out a total of $832,556,023.75 in family and medical leave benefits in FY23 (July 1, 2022-June 20, 2023).

What is the Massachusetts PFML Maximum Weekly Benefit for 2024?

For 2023, the state average weekly wage is $1,765.34 and the maximum weekly benefit rate is $1,129.82. For 2024, the state average weekly wage is $1,796.72 and the maximum weekly benefit rate will be $1,149.90. Employers can consult the DFML website for additional information and guidance on weekly benefit rate calculation.

Disclaimer: The information contained herein is not intended to be construed as legal advice, nor should it be relied on as such. Employers should closely monitor the rules and regulations specific to their jurisdiction(s) and should seek advice from counsel relative to their rights and responsibilities.

October 20, 2023

State Minimum Wage List 2024

Minimum wage rates increase every year in many states and localities. It’s important to monitor if and when these increases are set to happen to maintain payroll and HR compliance at your organization. Employers can be subject to significant penalties for wage and hour violations, of which failure to pay employees at least the state minimum wage is one example.

With the new year approaching, now is the time to review minimum wage rate increases by state for 2024. Be sure to review if and when your state’s minimum wage is increasing by checking our 2024 minimum wage chart at the end of this post.

What is the Federal Minimum Wage Rate?

The current federal minimum wage rate is $7.25 per hour. This rate applies to employees covered by the Fair Labor Standards Act (FLSA) – which is the vast majority of workers in the U.S.

Which States Have No Minimum Wage Rate?

Unlike state minimum wages, the federal minimum wage is set by the federal government. While most states have minimum wage rates that are higher than the federal minimum, there are seven states that either have a state minimum wage set lower than the federal minimum wage or do not have a state minimum wage at all. Therefore, the federal minimum wage of $7.25 applies in those states, which are Alabama, Georgia, Louisiana, Mississippi, South Carolina, Tennessee, and Wyoming.

Which States Have Minimum Wage Rate Increases in 2024?

Even if your state did not technically announce a new minimum wage rate for 2024, some states have their minimum wage rate indexed to inflation, which triggers an automatic increase in the state minimum wage. In total, 21 states plus Washington, D.C. will see minimum wage rate increases in 2024.

What is the Minimum Wage Rate in Each State for 2024?

The below information reflects minimum wage rates set at the state level, and includes rate increases effective January 1, 2024 unless otherwise noted. Please be aware that your particular city or county may set minimum wage rates that differ from the state level, and that your particular state, city, or county may have increases set for later in 2024 which will be noted next to the anticipated rate if applicable. Please also note the below reflects the minimum wage for non-tipped employees.

State	2023	2024
Alabama	$7.25	$7.25
Alaska	$10.85	$11.73
Arizona	$13.85	$14.35
Arkansas	$11.00	$11.00
California	$15.50	$16.00
Colorado	$13.65	$14.42
Connecticut	$15.00	$15.69
Delaware	$11.75	$13.25
District of Columbia	$17.00	$17.00
Florida	$12.00	$13.00 (effective 09/20/2024)
Georgia	$7.25	$7.25
Hawaii	$12.00	$14.00
Idaho	$7.25	$7.25
Illinois	$13.00	$14.00
Indiana	$7.25	$7.25
Iowa	$7.25	$7.25
Kansas	$7.25	$7.25
Kentucky	$7.25	$7.25
Louisiana	$7.25	$7.25
Maine	$13.80	$14.15
Maryland	$13.25	$15.00
Massachusetts	$15.00	$15.00
Michigan	$12.00	$12.00
Minnesota*	$10.59	$10.85
Mississippi	$7.25	$7.25
Missouri	$12.00	$12.00
Montana	$9.95	$10.30
Nebraska	$10.50	$12.00
Nevada	$11.25	$12.00 (for all employers, effective 07/01/2024)
New Hampshire	$7.25	$7.25
New Jersey**	$14.13	$15.13
New Mexico	$12.00	$12.00
New York***	$14.20	$15.00
North Carolina	$7.25	$7.25
North Dakota	$7.25	$7.25
Ohio	$10.10	$10.45
Oklahoma	$7.25	$7.25
Oregon****	$14.20	$14.20
Pennsylvania	$7.25	$7.25
Puerto Rico	$9.50	$10.50 (effective 07/01/24)
Rhode Island	$13.00	$14.00
South Carolina	$7.25	$7.25
South Dakota	$10.80	$11.20
Tennessee	$7.25	$7.25
Texas	$7.25	$7.25
Utah	$7.25	$7.25
Vermont	$13.18	$13.67
Virginia	$12.00	$12.00
Washington	$15.74	$16.28
West Virginia	$8.75	$8.75
Wisconsin	$7.25	$7.25
Wyoming	$7.25	$7.25

^**MINNESOTA: Listed rate is for large employers. Small employers will have a minimum wage of $8.85 per hour.

*** NEW JERSEY: Listed rate is for employers with 7 or more employees; employers with 6 or fewer employees or seasonal employees will have a minimum wage of $12.93. Also, seasonal and small employers were given until 2026 to pay their workers $15 per hour to lessen the impact on their businesses. The minimum hourly wage for these employees will increase to $13.73/hour on Jan. 1, 2024 up from $12.93.
^****NEW YORK: Listed rate is for most employers in New York State. New York City and Long Island and Westchester Counties have a minimum wage of $16.00 effective Jan. 1, 2024
***** OREGON: Listed rate is the standard state wage of $14.20 per hour. The minimum wage in the Portland Metro Area is $15.45 per hour and the minimum wage in Nonurban counties is $13.20 per hour.

October 3, 2023

Reminder: Revised Form I-9 Effective November 1, 2023

Effective November 1, 2023, employers will be required to utilize the revised Form I-9 published on uscis.gov on August 1,2023.

New Form I-9

The new Form I-9 features several updates including the following per USCIS:

“Reduces Sections 1 and 2 to a single-sided sheet;
Is designed to be a fillable form on tablets and mobile devices;
Moves the Section 1 Preparer/Translator Certification area to a separate, standalone supplement that employers can provide to employees when necessary;
Moves Section 3, Reverification and Rehire, to a standalone supplement that employers can print if or when rehire occurs or reverification is required;
Revises the Lists of Acceptable Documents page to include some acceptable receipts as well as guidance and links to information on automatic extensions of employment authorization documentation;
Reduces Form instructions from 15 pages to 8 pages; and
Includes a checkbox allowing employers to indicate they examined Form I-9 documentation remotely under a DHS-authorized alternative procedure rather than via physical examination.”

Optional Alternative Form I-9 For Employers Using E-Verify

On July 25, 2023, the Department of Homeland Security issued the following rule: Optional Alternative 1 to the Physical Document Examination Associated With Employment Eligibility Verification (Form I-9). This rule establishes an optional alternative procedure to the in-person physical examination of the documentation presented by persons during the Form I-9 completion and employment eligibility verification process. Employers electing to utilize this alternative document examination procedure must be participants in good standing in E-Verify and within three (3) business days of an employee’s first day of employment must:

Examine copies of Form I-9 documents or an acceptable receipt to ensure that the documents presented reasonably appear to be genuine;
Conduct a live video interaction with the employee presenting the documentation to ensure that such documentation reasonably appears to be genuine and related to that particular employee. For this step, an employee is required to electronically provide a copy of any documentation which s/he intends to present for remote inspection to his/her prospective employer prior to such virtual interaction;
Indicate on Form I-9 in the requisite box that that the employer utilized the alternative procedure to complete Section 2 or for reverification, as applicable;
Retain a clear and legible copy of the documentation consistent with applicable regulations; and
In the event of a Form I-9 audit or investigation by a relevant federal government official, make available clear and legible copies of the identity and employment authorization documentation presented by the employee in connection with the employment eligibility process.

As the alternative procedure is optional, employers are not required to utilize it. However, should they decide to utilize it at an E-Verify site, employers must do so for all employees at that site. Employers may, however, choose to limit their use of the alternative procedure to remote employees, while continuing to conduct in person examinations for those employees who work onsite or work a hybrid schedule of remote and in person work. Notwithstanding this flexibility, employers are prohibited from adopting practices for a discriminatory purpose or treating employees differently based on protected characteristics in their use of the alternative procedure.

Qualified employers were eligible to begin using the alternative procedure on August 1, 2023, for all employees hired after this effective date. Employers not enrolled in E-Verify as of August 1, 2023, must first become a participant in good standing in E-Verify by completing the enrollment and training processes before they can take advantage of the alternative procedure.

As reported in our Compliance Alert, the COVID-19 Form I-9 remote flexibilities expired on July 31, 2023, and employers had until August 30, 2023, to physically inspect all documents that had been remotely examined during the flexibilities period. However, under the new rule promulgated by the Department of Homeland Security, qualified employers were permitted to use the alternative procedure to satisfy this requirement by the August 30, 2023, deadline if certain conditions were met:

The employer was enrolled in E-Verify at the time of remote examination for the employee hired during the flexibilities period;
The employer created an E-Verify case for that employee (except In the case of reverification); and
The employer performed the remote inspection between March 20, 2020, and July 31, 2023.

For employers who utilized the alternative procedure to satisfy their document verification obligations following expiration of the COVID-19 remote flexibilities, they were required to complete an additional step in updating the Form I-9. Employers were required to notate in the Additional Information field under Section 2 or Section 3, as appropriate, the words “alternative procedure” with the date of examination.

October 3, 2023

Maine Minimum Wage Increases to $14.15 Per Hour January 1, 2024

What is Maine’s Minimum Wage for 2024?

Maine’s minimum wage for 2024 is $14.15 per hour. On September 15, 2023, the Maine Department of Labor announced that effective January 1, 2024, the state minimum wage will increase from $13.80 per hour to $14.15 per hour.

This increase is required as part of the annual adjustments to the state minimum wage based on the cost-of-living index (CPI-W) for the Northeast Region pursuant to state law. The increase in the cost of living is measured by the percentage increase, if any, as of August of the previous year over the level as of August of the year preceding that year. The amount of the minimum wage increase IS rounded to the nearest multiple of $0.05. The Maine Department of Labor reports a 2.4% increase in the CPI-W from August 2022 through August 2023.

What is Maine’s Tipped Minimum Wage for 2024?

Maine’s tipped or direct service wage will increase to $7.08 per hour effective January 1, 2024.

What is Maine’s Minimum Salary Threshold for Exempt Workers for 2024?

Also effective January 1, 2024, the minimum salary threshold for workers exempt from overtime pay will be $816.35 per week or $42,450.20 per year, up from $796.17 in 2023. Maine has released a guide to overtime requirements for salaried workers which can be accessed on the Maine Department of Labor website.

September 8, 2023

DOL Proposed Rule Would Expand Overtime Protections to Millions of Employees

On August 30, 2023, the Department of Labor (DOL) released its long-awaited Notice of Proposed Rule Making which would revise the regulations implementing the exemptions from minimum wage and overtime requirements for Executive, Administrative, Professional, Outside Sales, and Computer (EAP) employees under the Fair Labor Standards Act (FLSA).

DOL Proposed Overtime Rule 2023

The proposed rule would significantly raise the salary threshold requirement from $684.00 per week ($35,568.00 annually) to $1,059 per week ($55,068.00 annually). According to the DOL, this shift reflects the 35th percentile of earnings of full-time salaried workers in the lowest-wage census region, which is the American South.

The proposed rule also seeks to increase the highly compensated employee (HCE) total annual compensation requirement for full-time salaried workers from $107,432.00 to $143,988.00 per year based on current data (85th percentile nationally).

If finalized, the new rule would include automatic updates to these earnings thresholds every three (3) years with current wage data. The DOL has clarified that the proposed rule does not suggest changes to the standard duties test. See recently released FAQS here.

What are the Criteria for Overtime Exemptions?

As discussed in our April compliance alert, in order for employees to be exempt from overtime and minimum wage requirements under the FLSA they must meet the following criteria which together comprise the salary basis, salary level, and duties tests:

Coming Soon: New DOL Overtime Rules – Checkwriters According to its Fall 2022 Regulatory Agenda, the Department of Labor/Wage and Hour Division (DOL) anticipates new proposed overtime rules for May 2023. The agenda discusses that DOL is looking at implementing federal regulations regarding the white-collar exemptions under the FLSA’s minimum wage and overtime … checkwriters.com

1. The employee must be paid a salary (generally meaning a predetermined and fixed amount not subject to variations in the quality or quantity of work performed);

2. The employee must be paid a specific salary amount of at least $684.00 per week under current regulations (this amount would increase to $1,059.00 under the new proposed rule); and

3. The employee must perform primarily executive, administrative or professional duties as defined by the DOL.

DOL Overtime Rule Background

In 2016, the U.S. District Court for the Eastern District of Texas invalidated a similar final rule issued under the Obama administration which raised the salary level from $455.00 per week to $913.00 per week, increased the total annual compensation amount for HCE from $100,000.00 to $134,004.00, and added a mechanism to update the earnings threshold every three years. The district court found that the DOL had exceeded its authority in setting a salary threshold so high that it effectively eliminated the duties test. Without ruling on the permissibility of the mechanism itself, the district court found that as the final rule was unlawful, the automatic updating mechanism was likewise unlawful.

In 2019, the salary threshold was successfully updated under President Trump to the current level of $684.00 per week effective on January 1, 2020. As discussed in our June compliance alert, a lawsuit challenging the DOL’s regulatory authority to establish a salary threshold for the 2019 final rule was filed by a fast-food chain operator named Robert Mayfield in Austin, Texas in 2022. The case remains pending before Judge Robert Pitman in the U.S. District Court for the Western District of Texas.

Wage dynamics have changed significantly since 2019, especially during the COVID-19 pandemic, with employees seeing significant gains in compensation. This underscored the potential inadequacy of the current salary threshold of $35,568.00 in helping to identify bona fide EAP employees. By updating the salary threshold, the DOL is seeking to “more effectively identify who is employed in a bona fide executive, administrative, or professional capacity and ensure that the FLSA’s intended overtime protections are fully implemented.” Increasing the salary threshold will help to achieve the Department’s goal by “reduc[ing] the number of lower-paid white-collar employees who perform significant amounts of nonexempt work” from being included in the exemption.

However, the DOL also recognized during this rulemaking process that “even a well-calibrated salary level that is not kept up to date becomes obsolete as wages for nonexempt workers increase over time.” The solution to the DOL’s concern for the rule’s potential obsolescence is the adoption of a regulatory provision automatically updating salary levels in order to keep pace with increased employee earnings. The proposed rule would permit pausing of automatic updates under certain conditions, including for the DOL to engage in “notice-and-comment rulemaking to change the earnings requirements and/or updating mechanism, where economic or other conditions merit”.

While the proposed rule does not create any additional recordkeeping requirements for employers beyond those already required under 29 CFR Part 516, the recordkeeping burden for employers under the new rule would likely expand as more employees become eligible for overtime.

The NPRM was published in the Federal Register on September 8, 2023, officially opening the public comment period which will last until November 7, 2023. The proposed effective date for the new rule is 60 (sixty) days following publication of the final rule in the Federal Register. The proposed effective date is significantly more abbreviated than prior proposed overtime rules which featured 90 and 180 day effective dates following publication. The DOL suggests that a sooner effective date is nonetheless appropriate as employers and employees are already familiar with the procedures from the 2019 rulemaking process, and changed economic circumstances warrant the update.

A legal challenge of the rule is highly likely given the number of potential employees affected, as well as the projected increased labor costs to employers.

Employer Considerations and Future Implications

So what does all this mean for employers?

The DOL estimates that in year 1 of the rule becoming effective, 3.4 million currently exempt employees earning more than $684.00 but less than $1,059.00 per week could become eligible for overtime protection in the absence of employers increasing their earnings to or beyond the new salary threshold. Relative to highly compensated employees (HCE), the DOL estimates that 248,900 workers earning at least $107,432.00 per year, and who meet certain minimum duties could potentially become eligible for overtime protection if their total compensation is not increased to the new threshold of $143,988.00 annually.

Much remains to be seen including whether the final rule will remain as proposed once the public comment period has closed, and whether a successful legal challenge of the rule awaits as it did in 2016. Despite this uncertainty, there are steps employers can take now in order to better prepare themselves for the future ahead:

Employers should take this opportunity to review their employee classifications and conduct an audit of all positions to ensure employees are properly classified as exempt or nonexempt based upon job duties.
Employers would be wise to also analyze the economic impact of instituting salary increases to maintain the exemption for applicable employees and the potential increased overtime costs associated with potentially reclassifying employees as nonexempt where appropriate.
Employers facing expanded recordkeeping burdens due to a potential increase in nonexempt employees should also review their current recordkeeping framework and processes to ensure such mechanisms will continue to be effective in meeting their compliance obligations.

July 5, 2023

UPDATE: Release of New DOL Overtime Rules Delayed Until August

In its Fall 2022 Regulatory Agenda, the Department of Labor announced its intention to release updated overtime rules in May 2023. To read details about those updated overtime rules, please see our previous article: Coming Soon – New DOL Overtime Rules.

As that deadline has come and gone, the DOL has announced a new release date, but that deadline too may be a moving target. In its Spring 2023 Regulatory Agenda, the Department of Labor again announced that it is reviewing the regulations defining and delimiting the bona fide executive, administrative and professional exemptions from the Fair Labor Standards Act’s minimum wage and overtime requirements.

The agenda has proposed a new timetable for issuance of a Notice of Proposed Rulemaking slated for August 2023. However, delays in replacement of former U.S. Labor Secretary Marty Walsh combined with a lawsuit challenging the Department of Labor’s ability to establish a salary threshold as part of its regulatory authority, could cause further delays.

Acting U.S. Labor Security Julie Su has been formally nominated by President Biden as Walsh’s replacement, but faces significant opposition from Republicans based on her involvement with California’s controversial AB 5, which significantly expanded employee classification to large groups of gig workers in California.

The lawsuit challenging the Department of Labor’s regulatory authority to establish a salary threshold was filed by a fast-food chain operator named Robert Mayfield in Austin, Texas in 2022. The case is currently pending before Judge Robert Pitman in the U.S. District Court for the Western District of Texas, with motions for summary judgment filed by both parties as of March 2023. Judge Pitman has not issued a decision on both parties’ requests for summary judgment or whether the case will proceed to trial.

Employers stay tuned.

July 3, 2023

NYC restricts use of AI tools in employment decisions

On January 1, 2023, New York City implemented local law 144, which significantly restricts the use of Automated Employment Decision Tools (AEDTs) to screen candidates or employees in hiring and promotion decisions (AEDTs may be powered by Artificial Intelligence). On April 5, 2023, the Department of Consumer and Worker Protection issued final regulations implementing the law, with enforcement commencing on July 5, 2023. Local Law 144 prohibits employers and employment agencies from using AEDTs in employment decisions unless:

The AEDT has been subjected to bias audit testing within one (1) year of use;
Information about the AEDT bias audit has been made publicly available on the employer’s website; and
Notice has been provided to employees or job candidates about the use of such tools.

What are Automated Employment Decision Tools (AEDTs)?

An Automated Employment Decision Tool (AEDT) is a tool that “substantially assist or replaces” employers in making employment decisions. The law further elaborates in defining AEDTs as “any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues simplified output, including a score, classification, or recommendation, that is used to substantially assist or replace discretionary decision making for making employment decisions that impact natural persons.”

The law goes on to clarify what does not constitute an AEDT, stating that an AEDT is not one “which does not automate, support, substantially assist or replace discretionary decision-making processes and that does not materially impact natural persons.” Following public comment, the final regulations clarify the meaning of “to substantially assist or replace discretionary decision making,” to mean: “to rely solely on a simplified output (score, tag, classification, ranking, etc.), with no other factors considered; to use a simplified output as one of a set of criteria where the simplified output is weighted more than any other criterion in the set; or to use a simplified output to overrule conclusions derived from other factors including human decision-making.”

Accordingly, AEDTs which merely produce data, scores or classifications which are one of several factors considered in the decision-making process, with no simplified output given greater weight and where discretion is still maintained by the employer are likely not to be considered AEDTs subject to the new requirements of the law.

What Employers Need to Know

Employment decision is defined as “to screen candidates for employment or employees for promotion within the city,” thereby confining employment decisions to those related to hiring and promotion only. Other categories of employment decisions including termination and compensation appear to be excluded.

The notice to employees or job candidates regarding the employer’s use of AEDTs must be provided no less than ten (10) days before use of the AEDTs with instructions on how to request an alternative selection process or a reasonable accommodation under other laws, if available. This notice obligation, however, does not require employers to provide an alternative selection process.

The bias audit required to be performed prior to use of an AEDT must be an “impartial evaluation by an independent auditor.” The bias audit must include, but is not limited to, “the testing of an automated employment decision tool to assess the tool’s disparate impact on persons of any component 1 category required to be reported by employers pursuant to subsection (c) of section 2000e-8 of title 42 of the United States code as specified in part 1602.7 of title 29 of the code of federal regulations.” The aforementioned Component 1 categories refer to those on the EEO-1 Component 1 Report which is required to be filed annually by every employer subject to Title VII, and that has 100 or more employees.

Employers are advised to carefully review both the final regulations, which are detailed and complex in their requirements, as well as their current hiring and promotion practices to ensure compliance.

Employers who violate the law are subject to a civil penalty of not more than $500 for a first violation and each additional violation occurring on the same day as the first violation, and not less than $500 nor more than $1,500 for each subsequent violation.

June 30, 2023

Release of New DOL Overtime Rules Delayed

In its Fall 2022 Regulatory Agenda, the US Department of Labor (DOL) announced its intention to release updated overtime rules in May 2023. As that deadline has come and gone, DOL has announced a new release date, but that deadline too may be a moving target. In its Spring 2023 Regulatory Agenda, DOL again announced that it is reviewing the regulations defining and delimiting the bona fide executive, administrative and professional exemptions from the Fair Labor Standards Act’s minimum wage and overtime requirements.

The agenda has proposed a new timetable for issuance of a Notice of Proposed Rulemaking slated for August 2023. However, delays in replacement of former US Labor Secretary Marty Walsh combined with a lawsuit challenging DOL’s ability to establish a salary threshold as part of its regulatory authority, could cause further delays. Acting US Labor Security Julie Su has been formally nominated by President Biden as Walsh’s replacement, but faces significant opposition from Republicans based on her involvement with California’s controversial AB 5, which significantly expanded employee classification to large groups of gig workers in California.

Employers stay tuned for more updates on the Checkwriters News and Compliance Center!

June 23, 2023

I-9 Remote Verification Ends July 31

On July 31, 2023, the final extension of flexibilities regarding remote completion of federal Form I-9 will expire.

The Department of Homeland Security (DHS) advises in its October 19, 2022 news release that employers are “encouraged to begin, at their discretion” in-person verification of employee documentation relative to identity and employment authorization for any employees hired after March 20, 2020, who participated in remote verification in reliance on DHS and Immigration and Customs Enforcement (ICE) guidance issued in March 2020 and updated in March 2021.

Pursuant to the updated 2021 guidance effective April 1, 2021, only those employees hired after April 1, 2021 working in exclusively remote settings due to COVID-19-related precautions remained temporarily exempt from physical examination of their Form I-9 supporting documentation, “until they undertook non-remote employment on a regular, consistent, or predictable basis, or the extension of the flexibilities related to such requirements was terminated, whichever occurred earlier.” If employees were physically present at a work location, employers were not entitled to continue to utilize the Form I-9 flexibilities and employers were required to complete in-person physical examinations.

On May 4, 2023, DHS and ICE announced a 30-day compliance period following expiration of the remote verification flexibilities on July 31, 2023. Employers will have this period to conduct in-person physical examination of identity and employment eligibility documentation for all individuals hired after March 20, 2020, and who received a virtual or remote examination of their identity and employment eligibility documentation for their Form I-9.

Employers should follow USCIS guidance on how to notate and update Form I-9 when conducting the required physical inspections to ensure compliance before August 30, 2023.

On August 19, 2022, ICE issued a notice of proposed rulemaking (NPRM) seeking public comment on making the COVID-19 flexibilities relative to remote verification of Form I-9 documentation permanent. In its proposed changes and conditions for alternative procedures, DHS states that it is considering adding fraudulent document detection and or anti-discrimination training requirements for employers should remote verification be made a permanent alternative, as well as possibly restricting the eligible population to utilize the alternative procedures proposed to those employers enrolled and in good standing in E-Verify, and prohibiting use by those who have been the subject of a fine, settlement, or conviction relative to employment eligibility verification practices.

The comment period closed on October 17, 2022, and to date no final rule has been issued and one is not anticipated this year.

June 19, 2023

Florida E-Verify Begins July 1

On May 10, 2023, Florida governor Ron DeSantis signed into law SB 1718 which imposes new requirements for public agencies and private employers with twenty-five (25) or more employees to use the E-Verify system to verify a new employee’s employment eligibility within three (3) business days after the first day that the new employee begins working for pay.

Florida E-Verify Compliance

Covered employers must certify their compliance with this requirement annually on their first unemployment insurance return of each calendar year.
Employers must retain a copy of employment authorization documentation and any verification generated for a period of three (3) years.
If an employer is unable to verify an employee’s employment authorization due to the E-Verify system being unavailable, the employer is required to document the unavailability of the E-Verify system by retaining a screenshot from each day which shows the employer’s lack of access to the system, a public announcement that the E-Verify system is not available, or any other communication or notice recorded by the employer regarding the unavailability of the system.”
Employers who are found to have violated the law three (3) times in a twenty-four month period will be subject to a $1,000.00 fine per day, until the employer demonstrates to the Department of Economic Opportunity that noncompliance with the law has been cured (NOTE: Effective July 1, 2023, the Florida Department of Economic Opportunity will be renamed the Florida Department of Commerce).

Florida E-Verify and Unauthorized Aliens

An employer may not continue to employ an unauthorized alien after obtaining knowledge of that person’s unauthorized employment status.

Covered employers who utilize the E-Verify system or Form I-9 with respect to the employment of an individual who is subsequently determined to be an unauthorized alien are entitled to a rebuttable presumption that they have not violated the law. Additionally, employers who use the same documentation required by Form I-9 with respect to the employment of an individual subsequently determined to be an unauthorized alien have established an affirmative defense that they have not violated the law.

Employer Action Items

Covered employers should enroll and complete the necessary training for proper use of the E-Verify system and begin verifying employment authorization for all new hires effective July 1, 2023.

Employers who enroll in E-Verify are required to clearly display the Notice of E-Verify Participation and Right to Work posters in English and Spanish. Employers may also display the posters in other languages provided by Department of Homeland Security.

June 14, 2023

Pregnant Workers Fairness Act

Effective June 27, 2023, covered employers with fifteen (15) or more employees will be required to provide “reasonable accommodations” to “qualified employees” with “known limitations related to pregnancy, childbirth or related medical conditions” unless such accommodation would cause the employer an “undue hardship”. This law is applicable only to accommodations, and does not replace federal, state or local laws that provide greater protections for workers affected by pregnancy, childbirth or related medical conditions.

This article will detail the accommodations covered employers must make and what is prohibited, and review additional information about existing laws applicable to pregnant workers.

Background

The term “known limitation” is defined under the PWFA as a “physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions that the employee or the employee’s representative has communicated to the employer whether or not such condition meets the definition of disability” under the Americans with Disabilities Act (ADA). Where “known limitation” is not confined to the definition of disability under the ADA, it indicates that a more expansive range of conditions is intended, and therefore a lower burden for the employee to establish a need for reasonable accommodation under the law. The PWFA requires the Equal Employment Opportunity Commission (EEOC) to issue regulations within one year of enactment providing examples of reasonable accommodations and addressing known limitations related to pregnancy, childbirth, or related medical conditions.

Additionally, while the ADA requires that a qualified employee must be able to meet the essential functions of a position with or without a reasonable accommodation, under the PWFA an employee may be considered to be qualified even if she cannot perform an essential function so long as the inability is temporary, the essential function can be performed in the near future, and the inability to perform can be reasonably accommodated.

Similar to the ADA, under the PWFA, employers are required to provide a reasonable accommodation to qualified employees unless such accommodation constitutes an “undue hardship”. The definition and construction of undue hardship is consistent with the ADA and includes an action which requires significant difficulty or expense.

What are some examples of reasonable accommodations for pregnant workers under the Act?

The EEOC has published a list of reasonable accommodations proposed by the House Committee on Education and Labor including:

The ability to sit or drink water;
Closer parking;
Flexible hours;
Receive appropriately sized uniforms and safety apparel;
Receive additional break time to use the bathroom, eat, and rest;
Take leave or time off to recover from childbirth; and
Be excused from strenuous activities and/or activities that involve exposure to compounds not safe for pregnancy.

What is Prohibited Under the PWFA?

The PWFA prohibits covered employers from the following:

Requiring an employee to accept an accommodation without engaging in a discussion between employer and employee;
Denying a job to an applicant or other employment opportunity to an employee who is qualified for such position/opportunity on the basis of that individual’s need for a reasonable accommodation;
Requiring an employee to take leave if another reasonable accommodation could be provided to enable the employee to keep working;
Retaliating against an individual for reporting or objecting to unlawful discrimination under the PWFA or for participating in a PWFA proceeding; and
Interfering with an individual’s rights under the PWFA.

Covered employers include private and public sector employers with fifteen (15) or more employees, Congress, Federal agencies, employment agencies, and labor organizations.

Other Laws Applicable to Pregnant Workers

Title VII of the Civil Rights Act of 1964 (amended by the Pregnancy Discrimination Act) prohibits discrimination in employment on the basis of pregnancy, birth and related medical conditions. The Americans with Disabilities Act (ADA) makes it unlawful to discriminate in employment against a qualified individual with a disability. Under the ADA, pregnancy by itself is not a basis for accommodation as it is not considered to be a disability. However, a covered employee who experiences an impairment related to their pregnancy rising to the level of a disability as defined under the ADA may qualify for a reasonable accommodation.

The Family and Medical Leave Act (FMLA) provides for unpaid, job-protected leave for qualified family and medical reasons including incapacity related to pregnancy, childbirth and child bonding. Many states also provide protections for pregnant workers through state parental leave laws as well as state-based paid family and medical leave programs.

More recently, the PUMP Act (Providing Urgent Maternal Protections for Nursing Mothers Act), signed into law by President Biden on December 29, 2022, expanded workplace protections to nursing employees not previously covered by the Break Time for Nursing Mother’s Act enacted in 2010 and enforced by the Department of Labor. Under the PUMP Act, nearly all FLSA-covered employees have the right to take reasonable break time to express milk during the first year of their child’s life. Under the Act, employers must provide a private space (other than a bathroom) free from co-worker and public intrusion, and shielded from view in which employees may express breast milk. These same protections apply to teleworkers as well, who must be free from observation by any employer-provided or employer-mandated video system including web cameras used for security and/or virtual conferencing.

Employer Takeaway

Employers should review their accommodation policies and procedures to ensure compliance with the law, especially when it comes to conducting the interactive process with their employees who are seeking an accommodation under the PWFA.

June 9, 2023

How to Recognize Payroll Direct Deposit Scams

Companies are getting scammed out of tens of thousands of dollars at a time, and some don’t notice for days and even weeks.

Employers and HR Professionals are often the targets of malicious hacking attempts – usually through suspicious-looking emails that attempt to garner and/or change personal financial information. These scams are known as “business email compromise” (BEC).

More and more organizations are reporting cases of direct deposit fraud or near-misses. This article will provide you with some tips on how to recognize payroll direct deposit scams.

What is Business Email Compromise?

Business email compromise looks like this: An HR or Payroll Director receives an email requesting an urgent change to direct deposit information. If the target falls for the scam and changes account numbers, multiple pay periods could pass before the individual realizes either part or all of their paycheck has been diverted into an alternate account.

What can you do about it? This is where everyone in the organization plays the role of human firewall! Always treat requests for money or sensitive information with a high degree of skepticism. You can thwart these attacks by slowing down and thinking critically. When in doubt, verbally confirm with the sender that the request is legitimate. Verbally, is the key word. If you respond to the email asking for confirmation, you’re likely responding directly to the scammer.

This also highlights the importance of maintaining strict policies when it comes to the personal financial information of employees. For example, the changing of direct deposit accounts should only occur after a Direct Deposit Authorization Form is completed and signed, and, ideally, following a verbal confirmation of the requested change.

To add additional layers of security, some organizations use the “four eyes principle” which requires two different people to sign off on major transactions. No matter what, never assume a request is legitimate even if it comes from someone within our organization. Stay alert for anything out of the ordinary, and if you need more information, please ask!

“BEC is sophisticated because it avoids the use of malicious programs. Instead, it uses the victim’s trust to trick them into making fraudulent transactions,” says Youssef Karami, Director of IT Infrastructure at Checkwriters.

How to identify a fraudulent email

There are several tell-tale signs that the email you’re looking at is suspicious, and that the sender is attempting to commit direct deposit fraud.

Victims often report that it was “obvious” the request was a payroll direct deposit scam once they looked back at the email. Of course, hindsight is 20/20, and what matters is that payroll and HR professionals are on the lookout for red flags before any action is taken.

Some things to look out for include mismatched names and emails, a sense of urgency to the request, signature issues, and lack of a voided check or bank form.

From Name and Email Address Mismatch

Check out the screenshot below. If the “From Name” does not match the email address, it’s a red flag and should raise immediate concerns about the authenticity of the request.

Sense Of Urgency

Fraudulent payroll direct deposit change requests are often marked by phrases like “this is urgent” or “please change my direct deposit immediately.”

This should raise the question, “what’s the rush?” Of course, urgent payroll requests exist, but fraudsters deliberately try to speed up the process. Any request containing these or similar words or phrases should raise a red flag.

Issues With the Signature

If the direct deposit change request includes a form attachment, look at the signature. While electronic signatures are very common, they should be viewed with suspicion until the request is verified.

Also, sloppy errors like spelling mistakes or the first and last name in reverse order are red flags (see example below).

No Voided Check

It’s highly recommended to require a voided check or bank encoding form with a payroll direct deposit change request. If these are not included – as in the example below – then you should be suspicious of the request. These inclusions allow you to verify the address and/or name on the check or bank encoding form match the employee’s demographics.

Similarly, you should pay close attention to the SSN provided and verify that with the information you have on record.

Mismatched email domains

If the email claims to be from a reputable company, like Microsoft or your bank, but the email is being sent from another email domain like gmail.com, or microsoftsupport.ru it’s probably a scam. Also be watchful for very subtle misspellings of the legitimate domain name. Like micros0ft.com where the second “o” has been replaced by a 0, or rnicrosoft.com, where the “m” has been replaced by an “r” and a “n”. These are common tricks of scammers.

Suspicious links or unexpected attachments

If you suspect that an email message is a scam, don’t open any links or attachments that you see. Instead, hover your mouse over, but don’t click, the link to see if the address matches the link that was typed in the message. In the following example, resting the mouse over the link reveals the real web address in the box with the yellow background. Note that the string of numbers looks nothing like the company’s web address.

Conclusion

Payroll direct deposit scams are very common, and organizations across all industries have reported being targeted.

Payroll and HR professionals should always be suspicious of change requests until these requests are verified. You can do this through a phone conversation, face-to-face, or through another trusted, secondary form of communication.

In the meantime, pay close attention to the “red flag” items covered in this article, as they’ll serve as a first line of defense against those targeting you and your employees.

Here is an additional resource from Microsoft on protecting yourself from phishing.

April 4, 2023

Employers in DE, NJ, PA, and USVI: 3rd Circuit Holds PTO Not Part of Employee’s Salary Under FLSA

On March 15, 2023, the United States Court of Appeals for the Third Circuit held that PTO is not part of an employee’s salary, thereby permitting employers to reduce accumulated PTO of employees exempt from minimum wage and overtime under the Fair Labor Standards Act for performance related reasons without jeopardizing their exempt status.

Background

In order to be classified as exempt under Section 13(a)(1) of the FLSA, an employee employed in a bona fide executive, administrative, or professional capacity must meet both the salary basis requirement and a duties requirement. To be paid on a salary basis “means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. Subject to exceptions . . ., an exempt employee must receive the full salary for any week in which the employee performs any work, regardless of the number of days or hours worked.” Fact Sheet #17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act (FLSA).

In Higgins v. Bayada Home Health Care, Inc., No. 21-3286 (3d Cir. 2023) the plaintiffs, home healthcare nurses classified by their employer as salaried exempt professionals, filed a collective and putative class action in the U.S. District Court for the Middle District of Pennsylvania alleging that (1) their PTO qualifies as salary under the FLSA and its related regulations, and (2) by deducting from their PTO, their employer, Bayada Home Health Care, Inc., made deductions from their salary in contravention of the FLSA requirements for exempt employees.

The plaintiff employees were required to meet weekly productivity point minimums. Employees could request an increase or decrease in their weekly productivity minimums corresponding to a commensurate increase or decrease in pay. If employees exceeded their weekly productivity minimums then they would be paid additional compensation. If, however, they failed to meet their required productivity minimums then their employer deducted the difference between the points they were expected to earn and what they actually earned from the employees’ available PTO. Productivity points were represented by a number of hours per week. If an employee had insufficient available PTO to cover any productivity deficit, Bayada would not deduct from the employee’s base salary and the employee would continue to receive his/her full salary.

Bayada would deduct from an employee’s base salary, however, if an employee voluntarily took a day off without having sufficient PTO to cover the absence.

The U.S. District Court for the Middle District of Pennsylvania granted partial summary judgment for Bayada and then certified the question for immediate appeal at the Plaintiffs’ request.

In a case of first impression, the Third Circuit affirmed the District Court holding that PTO is not part of an employee’s salary under the FLSA, and that an employer’s deduction of its employees’ accumulated PTO for failure to meet performance requirements did not jeopardize the employees’ exempt status under the FLSA.

In support of its holding, the Court reasoned that,

“Neither the FLSA nor its related regulations explicitly define the term ‘salary.’ There nevertheless appears to be a clear distinction between salary and fringe benefits like PTO. . . An employer does not violate those conditions by deducting from an employee’s PTO because, when an employer docks an employee’s PTO, but not her base pay, the predetermined amount that the employee receives at the end of a pay period does not change. . . That an employee might at some point be able to convert her PTO into cash does not alter that fact. The regulation requires only that the employee receive a predetermined amount of money each pay period that is “part of the employee’s compensation[.]” Id. (emphasis added). So long as the employer does not dock that pre-determined part of the employee’s compensation, the employer has satisfied the salary basis test.”

Employer Takeaway

Employers in Pennsylvania, New Jersey, Delaware, and the U.S. Virgin Islands, the states and territory served by the U.S. Court of Appeals for the Third Circuit, should closely review this decision and their PTO policies and procedures concerning salary exempt employees under the FLSA.

The decision does not reflect the Court’s opinion on whether the employer’s PTO deductions were permissible under Pennsylvania wage and hour law, as the Court declined to consider that question citing plaintiff’s forfeiture of that argument at both the District Court level and on appeal.

April 4, 2023

Washington Cares Fund Update

As we previously covered, premium collection by employers under the Long-Term Services and Supports (LTSS) Trust Act was delayed until July 1, 2023, with benefits becoming available on July 1, 2026. The LTSS Trust Act established the Washington Cares Fund which provides a long-term care insurance benefit for eligible Washington employees, funded by mandatory worker contributions into a state trust fund. This is the first public long-term care insurance program in the nation. Under the program, eligible employees will be entitled to receive up to $36,500.00 in long-term care benefits over their lifetime (the benefit amount shall be increased annually, indexed to inflation). More information on the types of services and support which will be covered under the program is available on the state’s website. Eligible employees under the Act qualify in one of three ways:

Full benefit, early access:Contributed for three (3) out of the last six (6) yearsWorked at least 500 hours per year
Contributed for three (3) out of the last six (6) years
Worked at least 500 hours per year
Full benefit, lifetime access:Contributed for 10 years working at least 500 hours per year at any point in their life without a break of 5 or more years
Contributed for 10 years working at least 500 hours per year at any point in their life without a break of 5 or more years
Partial benefit, lifetime access:Individuals born after January 1, 1968 and who have contributed for at least 1 year will have access to a partial benefit, with each year during which the employee worked at least 500 hours earning 10% of the full benefit amount.
Individuals born after January 1, 1968 and who have contributed for at least 1 year will have access to a partial benefit, with each year during which the employee worked at least 500 hours earning 10% of the full benefit amount.

Additional information regarding benefit eligibility can be found here.

The State of Washington recently released resources for employers to assist with compliance as premium collection commences in the coming months. These resources include an Employer Toolkit, program calendar, Paycheck Insert, FAQs, Fact Sheet, Poster, Infographic, Program Overview Videos, Care Stories, and recorded Webinars to name a few. A list of dates of upcoming live webinars has also been made available.

The legislation delaying the program’s timeline signed by Governor Jay Inslee on January 27, 2022, also featured other improvements to the Washington Cares Fund program including enabling near-retirees to qualify for partial benefits under the program, and expanding the classes of individuals which may opt-out of participation in the program including “certain veterans with disabilities, spouses and registered domestic partners of military service members, workers on temporary nonimmigrant visas, and employees who work in Washington but live in a different state.”

Commencing July 1, 2023, employers are required to withhold $0.58 for each $100.00 of employee earnings for contribution to the fund. Unlike Washington Paid Leave, premium contributions are not capped at the social security maximum wage base. Employees who meet the requirements for an exemption to opt-out of participation in the program under the new expanded classes above may apply for an exemption online by creating a Washington Cares Exemption account. If approved by the Washington Employment Security Department, employees are required to provide a copy of their exemption approval letter to all current and future employers. Exemptions are effective the first quarter after an employee’s application is approved. Once notified of an employee’s exemption, employers must keep a copy of their approval letter on file, and must cease deducting Washington Cares premiums. Employers who fail to terminate withholding as of the effective date of an employee’s exemption will be liable to the employee for any premiums which were collected in error or in contravention of the Act’s directives.

April 3, 2023

Coming Soon: New DOL Overtime Rules

According to its Fall 2022 Regulatory Agenda, the Department of Labor/Wage and Hour Division (the (“Department”) anticipates new proposed overtime rules will be released in May 2023. The agenda discusses that the Department is currently reviewing the implementing federal regulations regarding the white-collar exemptions under the FLSA’s minimum wage and overtime requirements, for bona fide executive, administrative, and professional employees. A primary goal of the new proposed rulemaking would be to update and increase the salary level requirement, which is a requirement to meet any of the exemptions previously mentioned. The current salary level requirement for employees to be exempt from both minimum wage and overtime for employees employed as bona fide executive, administrative, and professional employees is $684.00 per week.

What are the FLSA white-collar exemptions?

Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees*. The exemptions apply only to white-collar employees who satisfy both the salary basis* and duties requirements prescribed by the regulations. It does not apply to “blue-collar” positions which typically feature manual labor, physical skill, and repetitive operations requiring use of the hands.

The current salary level requirement for employees to be exempt from both minimum wage and overtime for employees employed as bona fide executive, administrative, and professional employees is $684.00 per week. *The salary basis requirements do not apply to outside sales employees.

The salary level requirement was last updated in 2020 to its current level of $684.00 per week. Prior to that, the last time the Department had set the salary level basis was in 2004 at $455.00 per week. Per the agenda, and as a rationale for the Department’s proposed rulemaking, the Department asserts that, “[r]egular updates promote greater stability, avoid disruptive salary level increases that can result from lengthy gaps between updates and provide appropriate wage protection.”

What should employers expect?

When the notice of proposed rulemaking is released in May, there will be an opportunity for public comment before the rules are finalized and go into effect. The amount of the salary increase anticipated for May is unknown, but looking at recent history could provide employers with an indication of what to expect.

In 2016 under then President Obama, the Department of Labor issued a final rule raising the salary level from $455.00 per week to $913.00 per week, and also incorporated automatic increases every three (3) years indexed to inflation or wage growth. The rule was challenged however by a number of businesses, trade organizations and several states, with all cases being consolidated in the U.S. District Court for the Eastern District of Texas. Ultimately in August 2017, the Court declared the overtime rules invalid.

Employers should review their pay practices in advance of the Department’s anticipated May rule release, including being prepared for a potential increase in line with the Department’s previous attempt under President Obama.

April 2, 2023

Michigan Paid Medical Leave and Minimum Wage: Update

Reminder: Michigan Appeals Court halted changes to Michigan’s paid sick leave and state minimum wage laws which were set to go into effect on February 19, 2023. Employers are not presently required to comply with any changes to state-mandated paid sick leave, or increased state minimum wage.

Background

On January 26, 2023, the Michigan Court of Appeals unanimously reversed the decision of the Michigan Court of Claims which held that the process of “adopt and amend” by the Michigan legislature in enacting amended versions of voter initiatives regarding paid sick time and increased state minimum wage was unconstitutional. In doing so, the Michigan Court of Appeals reinstated the provisions of the Paid Medical Leave Act (formerly the Earned Sick Time Act) and the Improved Workforce Opportunity Wage Act as adopted and amended by the Michigan legislature.

Michigan Paid Medical Leave Act

Under the Paid Medical Leave Act, employers with fifty (50) or more employees are required to provide up to forty (40) hours of paid medical leave annually for eligible employees to exercise based on the following circumstances:

Physical or mental illness, injury, or health condition of the employee or his or her family member.
Medical diagnosis, care, or treatment of the employee or employee’s family member
Preventative care of the employee or his or her family member.
Closure of the employee’s primary workplace by order of a public official due to a public health emergency.
The care of his or her child whose school or place of care has been closed by order of a public official due to a public health emergency.
The employee’s or his or her family member’s exposure to a communicable disease that would jeopardize the health of others as determined by health authorities or a health care provider.
For domestic violence and sexual assault situations, employees may use paid medical leave for any of the following:
– Medical care or psychological or other counseling.
– Receiving services from a victim services organization.
– Relocation and obtaining legal services.
– Participation in civil or criminal proceedings related to or resulting from the domestic violence or sexual assault.

Paid medical leave accrues at a rate of one (1) hour for every thirty-five (35) hours worked, though employers may make the full forty (40) hours available at once at the onset of the benefit year or on the date that the individual becomes eligible during the benefit year on a prorated basis.

Eligible employees under the Act may carry-over up to forty (40) hours of accrued, unused paid medical leave from one benefit year to the next. However, an employer who provides the full allotment of paid medical leave at the beginning of the benefit year is not required to permit employees to carry over unused leave to the next benefit year.

What is an Eligible Employee under the Michigan Paid Medical Leave Act?

An eligible employee under the Paid Medical Leave Act is defined as an “individual engaged in service to an employer in the business of the employer and from whom an employer is required to withhold for federal income tax purposes.”

There are a number of classes of employees or types of employment that are excluded under the Act, however, including the following: “executive, administrative, and professional overtime exempt employees (emphasis added), employees covered by a private collective bargaining agreement that is in effect, employees of the United States government, another state, or a political subdivision of another state, individuals whose primary work location is not in this state, individuals 16-19 years of age being paid the youth training wage in accordance with the Improved Workforce Opportunity Wage Act, temporary employees as described in the Michigan Employment Security Act, variable hour employees as defined by 26 CFR 54.4980H-1, employees covered by the Railway Labor Act and Railroad Unemployment Insurance Act, individuals employed by an employer for 25 weeks or fewer in a calendar year for a job scheduled for 25 weeks or fewer, individuals who worked, on average, fewer than 25 hours per week during the immediately preceding calendar year.”

Michigan Minimum Wage

The Michigan minimum wage is $10.10 per hour (effective January 1, 2023) and will steadily increase to $12.05 per hour effective for calendar year 2030.

The Michigan Department of Labor and Economic Development maintains a Litigation on Minimum Wage and Paid Medical Leave Page for employers to utilize in keeping abreast of any developments.

March 20, 2023

New York State Pay Transparency Law Amended

On March 3, 2023, New York State Governor Kathy Hochul signed an amendment to the New York state pay transparency law.

Background: What is the New York State Pay Transparency Law?

Under the originally enacted New York pay transparency law, all private sector New York employers with four (4) or more employees are required to list compensation or a range of compensation for all advertised job postings.

Specifically, any advertisement for a job, promotion, or transfer opportunity that can or will be performed at least in part in New York, must contain: the compensation or range of compensation and the job description if such description exists. For jobs paid solely on commission, advertisements and postings must include a general statement that the position is commission based.

Under the original law, employers were also required to maintain necessary records including the history of compensation ranges for each job, promotion or transfer opportunity and the job descriptions for such positions if such descriptions exist. Range of compensation is defined under the law as the “minimum and maximum annual salary or hourly range of compensation for a job, promotion, or transfer opportunity that the employer in good faith believes to be accurate at the time of the posting of an advertisement for such opportunity.”

Employers are prohibited from refusing to interview, hire, promote, employ or otherwise retaliate against an applicant or current employee for exercising any rights under the law.

When Does the New York Pay Transparency Law Take Effect?

The New York pay transparency law takes effect on September 17, 2023, along with recent amendments which address issues relative to remote employees, record keeping requirements and definitions.

What Are the Recent Amendments to the New York Pay Transparency Law?

The amendments signed by Governor Hochul on March 3, 2023 made the following changes to the law:

Narrowed the scope of application of the law to jobs, promotions, or transfer opportunities that will “physically be performed, at least in part, in the state of New York, including a job, promotion, or transfer opportunity that will physically be performed outside of New York but reports to a supervisor, office, or other work site in New York.” By placing a physical performance or reporting requirement to a supervisor, office or other worksite in the state of New York, the law therefore does not apply to fully remote positions which do not feature a reporting requirement in New York as referenced above.
Removed the employer record keeping requirement.
Inserted a definition of “advertise” which shall mean “to make available to a pool of potential applicants for internal or public viewing, including electronically, a written description of an employment opportunity,” thereby explicitly including internal postings within the law’s scope as well as external postings.

Employer Takeaway

While the record keeping requirement has been removed, employers are advised to maintain sufficient documentation of their compliance with the law in the event that they are required to defend any actions which may implicate the law’s transparency requirements.

Violations of the law will result in the imposition of a civil penalty in an amount not to exceed $1,000.00 for a first violation, $2,000.00 for a second violation or $3,000.00 for a third or subsequent violation.

Employers should review their current posting and compensation practices with their human resource departments to ensure compliance with the law in advance of the September 17, 2023 effective date.

March 20, 2023

Illinois Paid Leave Act

On Monday, March 13, 2023, Governor JB Pritzker of Illinois signed into law SB208, the Paid Leave for Workers Act (“the Act”). Illinois is now the third state to require paid time off for any reason (not just medical reasons). Employees are not required to provide documentation or certification as proof or in support of a request for paid leave.

When Does Illinois Paid Leave Take Effect?

Illinois Paid Leave takes effect January 1, 2024 at which time employees also begin accruing leave. Employees can start using accrued paid leave on March 31, 2024, or ninety (90) days following commencement of employment (whichever is later).

Employers should take advantage of this extra time to review time off policies and practices to ensure compliance with the Act by 2024.

Who is Covered by Illinois Paid Leave?

Employees (including domestic workers) working for an employer in Illinois are covered by the Act.

There are some individuals and employers excluded from coverage including independent contractors, employees covered by a collective bargaining agreement in certain industries including construction and parcel delivery, and school and park districts.

In addition, the Act does not apply to employers that are covered by a municipal or county ordinance that requires employers to provide any form of paid leave to their employees – as long as that ordinance is in effect on January 1, 2024. However, any local ordinance providing for paid leave which is enacted or amended after January 1, 2024 must comply with the requirements of the Act.

Accrual and Use of Illinois Paid Leave

Under the Act, employees accrue paid leave at the rate of one (1) hour per every forty (40) hours worked. Employees receive their full wage during any period of paid leave, with tipped employees receiving the full minimum wage in their respective location.

Employers cannot require employees to find coverage for their absence, and may set a minimum increment for use of paid leave, not to exceed two (2) hours per day.

Illinois Paid Leave Notice Requirements

Illinois Paid Leave is provided following an employee’s oral or written request in accordance with the employer’s reasonable paid leave policy notification requirements including: 7 days’ advance notice if the employee’s use of paid leave is foreseeable, or notice as soon as is practicable after the employee is aware of the necessity for leave, if such leave was not foreseeable. Where notice is required for an unforeseeable use of paid leave, the employer must provide a written policy detailing the procedures for the employee to follow in order to provide notice.

Employer Responsibilities Under Illinois Paid Leave

Employers are required to post in a conspicuous place on the premises where notices to employees are customarily posted, as well as include in a written employee manual or policy, a notice to be prepared by the Illinois Department of Labor summarizing the requirements of the Act. Employers who violate this requirement are subject to a civil penalty of $500.00 for the first audit violation, and $1,000.00 for any subsequent audit violation.

Employers also have record keeping requirements under the Act, requiring them to maintain records of hours worked, paid leave which has accrued and which has been taken, and any remaining paid leave balance. These records must be retained for at least three (3) years, and must be made available to the Department at reasonable times during business hours to monitor employer compliance with the Act.

Employers with existing paid leave policies with the minimum paid leave required under the Act, and which permit employers to take paid leave for any reason, are not required to change their existing paid leave policies. Nothing in the Act prohibits employers from adopting a paid leave policy which is more generous than that provided under the Act.

Employers are prohibited from interfering, denying or changing their employees’ work hours to avoid providing eligible paid leave, as well as retaliating against any employee who exercises or attempts to exercise his/her rights under the Act, opposes practices in violation of the Act, or for supporting another individual’s exercise of his/her rights under the Act.

Employers are not required to pay an employee for any accrued, but unused paid leave at the time of termination, resignation, retirement or other separation from employment. However, if the employer decides to credit the accrued paid leave provided under the Act to an employee’s PTO or vacation account, then any unused paid leave would be payable to the employee upon the employee’s separation from employment in accordance with Illinois’s existing rules regarding vacation time.

Penalties and Enforcement

Employers who violate the Act are subject to a civil penalty of $2,500.00 for each separate offense, with some exceptions. All penalties collected will be deposited into the Paid Leave Workers Fund which was created in the Illinois state treasury and which shall be dedicated to enforcing the Act.

Press Release: Gov. Pritzker Signs Historic Legislation Guaranteeing 40 Hours of Paid Leave
Full Text of the Act

December 7, 2022

Tipped Minimum Wage by State

Employees who receive the majority of their compensation from tips are typically paid a tipped minimum wage, rather than standard minimum wage.

While the federal tipped minimum wage stands at $2.13 per hour, many states set rates that are higher and have varying requirements. To find out the tipped minimum wage by state, review the chart below:

State	2023 Tipped Minimum Wage Effective date is noted. (If no date, in effect currently.)
Alabama	$2.13 for tipped employees.
Alaska	No tip credit. State minimum wage applies.
Arizona	$10.85 ($3 below state minimum wage rate of $13.85) for tipped employees. Effective January 1, 2023.
Arkansas	$2.63 for tipped employees. Applies to employers with four or more employees.
California*	No tip credit. State minimum wage applies.
Colorado	$10.63 ($3.02 max tip credit allowed on state minimum wage which is $13.65). Effective January 1, 2023.
Connecticut	$6.38 for tipped employees and $8.23 for bartenders.
Delaware	$2.23 for tipped employees.
District of Columbia	$5.35 for tipped employees.[1]
Florida	$8.98 for tipped employees. (Effective 9/30/23)
Georgia	$2.13 for tipped employees.
Hawaii	Maximum tip credit is $1.00 per hour bringing minimum cash wage to $11.00 per hour (state minimum wage is $12.00 per hour).
Idaho	$3.35 for tipped employees.
Illinois	$7.80 for tipped employees (60% of state minimum wage) and $10.50 for minors under the age of 18 working fewer than 650 hours per calendar year. January 1, 2023.
Indiana	$2.13 for tipped employees.
Iowa	$4.35 for tipped employees.
Kansas	$2.13 for tipped employees.
Kentucky	$2.13 for tipped employees.
Louisiana	$2.13 for tipped employees.
Maine	$6.90 for tipped employees. (Tip credit up to 50% of state minimum wage of $13.80) Effective January 1, 2023
Maryland	$3.63 for tipped employees.
Massachusetts	$6.75 for tipped employees.
Michigan	$9.60 for tipped employees (80% of state minimum wage) (effective 2/19/23)[2]
Minnesota**	No tip credit. State minimum wage applies.
Mississippi	$2.13 for tipped employees.
Missouri	$6.00 for tipped employees (50% of state minimum wage)
Montana	No tip credit. State minimum wage applies.
Nebraska	$2.13 for tipped employees
Nevada	No tip credit. State minimum wage applies.
New Hampshire	$3.26 (45% of applicable minimum wage)
New Jersey***	$5.26 for tipped employees Effective January 1, 2023
New Mexico	$3.00 for tipped employees Effective January 1, 2023
New York****	$9.45/$10.00 for food service tipped employees, and $11.85/$12.50 for service employees Effective December 31, 2022
North Carolina	$2.13 for tipped employees
North Dakota	$4.86 for tipped employees.
Ohio[3]	$5.05 for tipped employees. Effective January 1, 2023.
Oklahoma	$2.13 for tipped employees.
Oregon*****	No tip credit. State minimum wage applies.
Pennsylvania	$2.83 for tipped employees (if employee earns at least $135.00 in tips per month)
Puerto Rico	Federal minimum wage of $7.25 plus tips to equal Puerto Rico minimum wage.
Rhode Island	$3.89 for tipped employees.
South Carolina	$2.13 for tipped employees.
South Dakota	No less than $5.40 per hour, which will be no less than 50% of the state minimum wage. Effective January 1, 2023
Tennessee	$2.13 for tipped employees.
Texas	$2.13 for tipped employees.
Utah	$2.13 for tipped employees.
Vermont	$6.59 for tipped employees (50% of the state minimum wage).
Virginia	$2.13 for tipped employees.
Washington	No tip credit-state minimum wage applies.
West Virginia	$2.62 for tipped employees (tip credit of up to 70% of state minimum wage [$6.13] for employers with 6 or more employees.)
Wisconsin	$2.33 for tipped employees.
Wyoming	$2.13 for tipped employees.

[1]On November 8, 2022, Washington DC voters approved a ballot initiative (82) phasing out tipped minimum wage by 2027. Initiative 82 will eliminate the city’s tipped minimum wage by increasing the minimum wage for tipped workers from $5.35 per hour to $16.10 per hour by 2027, bringing tipped workers up to the same DC minimum wage.

[2] Litigation is ongoing in Michigan relative to the state minimum wage, so please be advised that additional information and/or changes may be forthcoming.

[3] Ohio Minimum wage will apply to businesses with annual gross receipts of $342,000.00 or more per year. For businesses with annual receipts less than $371,000.00 per year after January 1, 2023, the state minimum wage is $7.25 per hour.

November 3, 2022

State Minimum Wage List 2023

Did you know that failure to pay your employees at least the state minimum wage is one of the most common wage and hour violations? Employers can be subject to significant penalties due to this basic oversight.

As the new year approaches, now is the time to review minimum wage rate increases by state for 2023. Be sure to review if and when your state’s minimum wage is increasing by checking our 2023 minimum wage chart.

Even if your state did not technically announce a new minimum wage rate for 2023, some states have their minimum wage rate indexed to inflation, which triggers an automatic increase in the state minimum wage.

The below information reflects minimum wage rates set at the state level, and includes rate increases effective January 1, 2023 unless otherwise noted. Please be aware that your particular city or county may set minimum wage rates that differ from the state level, and that your particular state, city, or county may have increases set for later in 2023 which will be noted next to the anticipated rate if applicable. Please also note the below reflects the minimum wage for non-tipped employees.

State	2022	2023
Alabama	$7.25	$7.25
Alaska	$10.34	$10.85
Arizona	$12.80	$13.85
Arkansas	$11.00	$11.00
California*	$15.00	$15.50
Colorado	$12.56	$13.65
Connecticut	$14.00	$15.00 (effective 6/1/23)
Delaware	$10.50	$11.75
District of Columbia	$15.20	$15.20
Florida	$11.00	$12.00 (effective 9/30/23)
Georgia	$7.25	$7.25
Hawaii	$10.10	$12.00 (effective 10/1/22)
Idaho	$7.25	$7.25
Illinois	$12.00	$13.00
Indiana	$7.25	$7.25
Iowa	$7.25	$7.25
Kansas	$7.25	$7.25
Kentucky	$7.25	$7.25
Louisiana	$7.25	$7.25
Maine	$12.75	$13.80
Maryland	$12.50	$13.25
Massachusetts	$14.25	$15.00
Michigan	$9.87	$12.00 (effective 2/19/23)
Minnesota**	$10.33	$10.59
Mississippi	$7.25	$7.25
Missouri	$11.15	$12.00
Montana	$9.20	$9.95
Nebraska	$9.00	$10.50
Nevada	$9.50	$10.50 (if offer specialized health benefits) $11.25 (all others) (effective 07/01/23)
New Hampshire	$7.25	$7.25
New Jersey***	$13.00	$14.13
New Mexico	$11.50	$12.00
New York****	$13.20	$14.20
North Carolina	$7.25	$7.25
North Dakota	$7.25	$7.25
Ohio	$9.30	$10.10
Oklahoma	$7.25	$7.25
Oregon*****	$13.50	$13.50
Pennsylvania	$7.25	$7.25
Puerto Rico	$8.50	$9.50 (effective 07/01/23)
Rhode Island	$12.25	$13.00
South Carolina	$7.25	$7.25
South Dakota	$9.95	$10.80
Tennessee	$7.25	$7.25
Texas	$7.25	$7.25
Utah	$7.25	$7.25
Vermont	$12.55	$13.18
Virginia	$11.00	$12.00
Washington	$14.49	$15.74
West Virginia	$8.75	$8.75
Wisconsin	$7.25	$7.25
Wyoming	$7.25	$7.25

* CALIFORNIA: $15.50 rate in 2023 applies to all employers in California regardless of employee count (rate in 2022 applied only to employers with 26 or more employees).
^**MINNESOTA: Listed rate is for large employers. Small employers will have a minimum wage of $8.63 per hour.

*** NEW JERSEY: Listed rate is for employers with 7 or more employees; employers with 6 or fewer employees or seasonal employees will have a minimum wage of $12.70. Also, seasonal and small employers were given until 2026 to pay their workers $15 per hour to lessen the impact on their businesses. The minimum hourly wage for these employees will increase to $12.93/hour on Jan. 1, up from $11.90.
^****NEW YORK: Listed rate is for most employers in New York State. New York City and Long Island and Westchester Counties have a minimum wage of $15.00.
***** OREGON: Listed rate is the standard state wage of $13.50 per hour. The minimum wage in the Portland Metro Area is $14.75 per hour and the minimum wage in Nonurban counties is $12.50 per hour. More info >>

October 18, 2022

Connecticut Adds CT FMLA Notice Requirements

Connecticut has adopted new family and medical leave (CT FMLA) regulations. While the updated regulations primarily incorporate the changes to the law that took effect on January 1, 2022, they also create new notice requirements, described below.

According to the Connecticut Department of Labor (CT DOL) website, the regulations will be retroactive to January 1, 2022. If an employee took CT FMLA leave since January 1, 2022, it’s reccommended to provide the notices now. You can review the regulations here.

Note that CT FMLA is distinct from CT paid family and medical leave, although the two will often run concurrently.

General Notice

Employers must provide employees with written notice of their rights and obligations under CT FMLA upon hire. This notice can be distributed electronically, and the CT DOL provides a sample notice here.

Eligibility and Rights and Responsibilities Notice

Employers must provide an employee with a written notice regarding their eligibility and their rights and responsibilities. This must be provided within five business days of when the employee requests CT FMLA leave or when the employer has enough information to know that the employee’s leave might be for a qualifying reason under CT FMLA. The CT DOL has provided a template form here.

Designation Notice

Employers must also provide an employee with written notice of whether a leave will be designated as CT FMLA leave within five business days of knowing whether the leave qualifies. The CT DOL has provided a template form here.

Action Items

Add a CT FMLA notice to your new-hire paperwork.
Revise your leave administration process to ensure that you provide the Eligibility Notice and Designation Notice to employees within the required timeframes.
If 10 percent or more of your workforce can’t read English, provide the notices in a language the employee can read, as required by the regulations.

October 13, 2022

Key Dates: New Hampshire Paid Family and Medical Leave

New Hampshire Paid Family and Medical Leave (NH PFML) plan coverage begins January 1, 2023, and employer open enrollment begins December 1, 2022. New Hampshire has selected Metropolitan Life (MetLife) as the state insurance partner. The NH PFML plan is the first voluntary, state-sponsored plan in the country and is available to all New Hampshire employers and employees.

New Hampshire Paid Family and Medical Leave Qualifying Events

Employers and employees (if the employer does not provide NH PFML or an equivalent benefit) may purchase insurance to provide wage replacement benefits up to 60% of an employee’s wages (up to the Social Security wage cap) for up to six (6) weeks per year for absences from work due to qualifying life events. The qualifying events for New Hampshire paid Family and Medical Leave include:

Serious health condition not covered by disability (includes childbirth)
Bonding with a child during its first year (includes adoption, fostering)
Caring for a family member with a serious health condition
Demands or needs regarding an active duty spouse, child, or parent
Caring for a covered service member with a serious injury or illness if spouse, child, parent, or next of kin

New Hampshire Paid Family and Medical Leave Tax Credits

Employers who participate and purchase plan coverage through MetLife are eligible for a Business Enterprise Tax Credit (BET) equal to 50% of the NH PFML insurance premium that they pay. While employers can choose to offer a plan duration of twelve (12) weeks of paid leave, the BET credit will only be calculated on the premiums payable by the employer for the 6-week plan duration.

Employers may fully fund the premium cost, assign the full cost to the employee, or allocate the cost between the employer and employee in the configuration of its choosing. According to the NH PFML website, the cost of the plan for employers will be determined by “work[ing] directly with MetLife to customize NH PFML Insurance and premium to meet their business needs within regulatory parameters set by the state.” The BET credit is not applied to premiums payable by employees.

Is New Hampshire Paid Family and Medical Leave Mandatory?

New Hampshire Paid Family and Medical Leave is a voluntary program. Employers are not obligated to participate in the plan. However, employers are required to support the NH PFML insurance claims process.

However, even if employers choose not to participate, they still need to support the claims process for their covered workers by providing wage and leave information, work schedules, and other benefit information as requested by MetLife.

New Hampshire Paid Family and Medical Leave Alternatives

If employers want to provide paid family and medical leave benefits to their employees, but do not want to purchase coverage from MetLife, then they can provide other paid family and medical insurance leave plans approved by the NH Department of Insurance or provide self-insured equivalent benefit coverage. However, if employers elect not to purchase coverage through MetLife, they’re not eligible for the BET credit.

New Hampshire Paid Family and Medical Leave Payroll Deductions

For employers with 50 or more employees, worker premium payments must be collected via payroll deduction, even if workers purchase coverage under a NH PFML individual plan. If the employer assumes the total cost of the premiums for its employees, then payroll deduction is not required. Employers with 50 or more employees are required to restore workers to the position they held or its equivalent (pre-leave) when such leave is over, and must continue to provide health insurance during periods of leave, with employees continuing to meet their share of costs associated with such coverage.

Employers with less than 50 employees are not required to utilize payroll deductions to collect worker premium payments, and can make payment arrangements directly through MetLife. If smaller employers choose not to offer coverage and their employees enroll in individual coverage, then these employees will be responsible for their own premium payments.

Under the NH PFML plan, there is an unpaid waiting period of one week prior to benefits being paid, and a seven (7) month waiting period before an employee becomes eligible to submit a claim for benefits. Under the plan, premiums cannot exceed $5.00 per week, and leave may be taken on either a continuous or intermittent basis, in at least four (4) hour increments.

For more information, please visit the NH PFML website for employers.

October 13, 2022

New York Paid Family Leave Changes

New York state implemented a Paid Family Leave (PFL) program in 2018. New York PFL provides up to 12 weeks of paid leave for the following:

Bonding with a new child.
Caring for a family member with a serious health condition.
Assisting loved ones due to deployment abroad of an active-duty service member.

New York recently announced two changes to the program – decreasing the contribution rate and increasing the maximum weekly benefit.

What is the Contribution Rate for New York Paid Family Leave for 2023?

The contribution rate for New York Paid Family Leave for 2023 is .455% of an employee’s wages each pay period. The amount cannot exceed $399.43. This new rate is a 10% reduction from the premium rate for 2022, which was 0.511% with a maximum employee contribution of $423.71.

If an employee’s contributions reach the new maximum of $399.43 before the end of the calendar year, then the employee will not be liable for any contributions in excess of this threshold. The change also provides that the 0.005% surcharge included in the rates for 2021 and 2022 to cover COVID-19 claims paid under the New York COVID-19 paid sick leave law will not be included in the 2023 rate.

What is the Maximum Weekly Benefit for New York Paid Family Leave for 2023?

The maximum weekly benefit for New York Paid Family Leave for 2023 is $1,131.08 per week. This is based on an increased New York State Average Weekly Wage (NYSAWW) of $1,688.19 (the maximum benefit under the program is calculated as 67% of the NYSAWW). This new rate is a $62.72 increase over 2022.

For more information, please visit the New York Paid Family Leave website.

October 3, 2022

Oregon Equal Pay Act

The Oregon Equal Pay Act (OEPA) was enacted in 2017, and prohibits employers from engaging in pay discrimination for comparable work on the basis of certain protected characteristics. Compensation is broadly defined under the OEPA, but this definition was narrowed temporarily in response to hiring and retention obstacles facing employers as a result of COVID-19.

In order to provide flexibility to employers navigating hiring and worker retention challenges which arose during the pandemic, the OEPA was amended to include time-limited exceptions for certain forms of compensation which employers could provide to employees without adhering to OEPA’s strict equal pay requirements. These exceptions included vaccine incentives, hiring bonuses, and retention bonuses. However, these exceptions expired on September 28, 2022, the 180^th day following expiration of Oregon’s state of emergency on April 1, 2022, per the terms of the legislation.

Employers should review their practices for vaccine incentives, hiring bonuses, and retention bonuses and evaluate whether such practices comport with the law’s pay equity requirements following September 28, 2022.

Background on the Oregon Equal Pay Act (OEPA)

The Oregon Equal Pay Act (OEPA) was enacted in 2017, and became generally enforceable by the Oregon Bureau of Labor and Industries in 2019.* Here are some of the highlights of the law you should be aware of:

The OEPA prohibits employers from engaging in pay discrimination for comparable work on the basis of race, color, religion, sex, sexual orientation, national origin, marital status, veteran status, disability, or age.
Employers are prohibited from reducing employee compensation in order to equalize pay amongst employees to comply with the law.
Differential pay for comparable work is permitted in limited circumstances, if the pay structure is consistent and verifiable, and the reason for the difference in pay is based on one or more of the following bona fide factors: “a seniority system, a merit system, a system that measures earnings by quantity or quality of production, including piece-rate work, workplace location, travel, education, training, or experience.”
Compensation is broadly defined under the OEPA and includes wages, salary, bonuses, benefits, fringe benefits and equity-based compensation.
Employers are required to post pay equity workplace posters.
Employers are prohibited from retaliating against an employee and/or discriminating against an employee who makes a complaint under the law or who cooperates with an investigation related to the law.
Employers may not screen potential candidates based upon their previous earnings history, nor may employers determine compensation for a job based on the current or past compensation of a prospective new employee, excluding internal transfers. *Employers who violate the Act’s ban on salary history inquiries may not be subject to a civil action by employees until January 1, 2024.

Additional information for employers may be found on the Oregon Bureau of Labor and Industries website.

October 3, 2022

Maryland HR Compliance Updates: Fall 2022

There are several new pieces of legislation in Maryland that went into effect October 1, 2022:

The first new Maryland legislation (SB450) alters the definition of harassment as it pertains to employment discrimination.
The second (SB451) tolls the statute of limitations for an employee to file a civil action alleging an unlawful employment practice while an administrative charge is pending.
The third (HB78) extends disability accommodations to job applicants.

Maryland Definition of Employment Harassment Altered

SB450 alters the definition of harassment to include unwelcome and offensive conduct which need not be severe or pervasive and the “conduct is based on race, color, religion, ancestry or national origin, sex, age, marital status, sexual orientation, gender identity, or disability.” The new definition also defines sexual harassment as “conduct, which need not be severe or pervasive, that consists of unwelcome sexual advances, requests for sexual favors, or other conduct of a sexual nature.” To constitute harassment, including sexual harassment, “(1) submission to the conduct is made either explicitly or implicitly a term or condition of employment of an individual; (2) submission to or rejection of the conduct is used as a basis for employment decisions affecting the individual; or (3) based on the totality of the circumstances, the conduct unreasonably creates a working environment that a reasonable person would perceive to be abusive or hostile.” By removing the requirement that conduct be severe or pervasive, complainants enjoy a decreased burden of establishing a claim for harassment in the employment context, potentially increasing the number of claims that employers may be subjected to.

Maryland Statute of Limitations Tolled for Unlawful Employment Practice Suits

Under existing Maryland law, a complainant may bring a civil action alleging an unlawful employment practice if the complainant initially filed a timely administrative charge or a complaint under federal, State, or local law; at least 180 days have elapsed since the filing of the administrative charge or complaint; and the complaint was filed within the applicable statute of limitations. The statute of limitations for a plaintiff to file a civil action on the basis of an unlawful employment practice is “two (2) years after the alleged unlawful employment practice occurred; or if the complaint is alleging harassment, the civil action is filed within 3 years after the alleged harassment occurred.” SB451 tolls the statute of limitations for a complainant to file a civil action alleging an unlawful employment practice while an administrative charge or complaint is pending, thereby providing complainants with additional time to initiate a lawsuit. Delays in the disposition and processing of an administrative charge or proceeding could significantly expand the time period for employees to commence a civil action, delaying finality for employers as well as potentially impeding their ability to defend against claims due to the passage of time.

Disability Accommodations Extended to Applicants for Employment

Lastly, HB78, extends an employer’s existing obligation to reasonably accommodate an employee’s disability to applicants for employment as well, unless such accommodation would cause “undue hardship on the conduct of the employer’s business”. This requirement is also effective October 1, 2022, and is applicable to employers with fifteen (15) or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year.

October 3, 2022

How to Improve Your Performance Reviews Process

The below is a post by Felicia Corbeil, Human Resources Manager at Checkwriters. Her particular areas of focus include hiring, benefits administration, and, more recently, the design, development, and launch of comprehensive performance review processes.

Performance Reviews are effective, mainly because employees want feedback about their job. However, organizations often run into difficulties building a process that works for their managers and employees. When performance reviews are done correctly, they’re a huge benefit to the entire team!

The secret to building an effective performance review process is by keeping the focus on individual employee growth. HR leaders can use a mix of formal and informal reviews to achieve this.

The rest of this article will detail several best practices HR leaders can use to create an effective performance review process that will benefit employees, managers, and the organization.

How To Keep the Performance Review Focus on Individual Employee Growth

While the frequency of performance reviews depends on various factors like industry, size, and culture, it’s widely understood that one formal review per year is not sufficient for a process focused on employee growth.

Rather, managers should meet with their team at a pace that makes sense for their department and utilize a mix of formal and informal conversations regarding an employee’s performance and goals.

For example, if an employee finds a solution to a long-standing problem, they absolutely deserve praise in the moment – not at a formal review process months later! Alternatively, an employee making the same mistake regularly should be corrected quickly.

While these suggestions may seem obvious, employees can fail or seek work elsewhere when HR and/or individual managers neglect to treat performance reviews as an ongoing process, and instead fall back on the formal scheduled performance review as a catch-all for both praise and correction.

What an Informal Review Should Look Like

Informal reviews with a team should be regularly occurring – even weekly. A manager’s job is to run their team effectively, and a team cannot run effectively without communication and coaching. These types of reviews can be quick five-minute conversations regarding current workload, time-sensitive issues, and individual employee goals.

Informal reviews are the perfect opportunity to raise potential issues and discuss and present ways to make improvements. When appropriate, these informal check-ins can serve as opportunities to get to know employees on a more personal level, which can help in understanding how they receive and respond to praise and criticism.

Following these informal conversations, compose and date a quick note consisting of conversation highlights. This will provide you with a log of highs and lows of individual employee performance for the time periods between formal reviews. Then, when it comes time for formal reviews, raises, promotions, or even a termination, you have all the information necessary to suggest appropriate action.

What a Formal Review Should Look Like

Formal reviews should also be conversational in tone. The significant difference, however, should be a focus on the future rather than the immediate: where do employees see themselves between now and the next formal review? What goal(s) do employees have for themselves, the team, and the company as a whole?

During the formal review, all those informal reviews and conversations come into play, as the manager has had the opportunity to build a relationship with members of the team and should understand individual strengths and struggles. Armed with this knowledge, managers can work with individual employees to build a roadmap to individual, team, and company goals.

Again, formal reviews should focus on employee improvement for the future. Examples include obtaining relevant certifications, tackling problems within the team or company they can be tasked with solving, or additional leadership opportunities or project ownership.

As stated earlier, part of those informal reviews should be asking and coaching that employee through the goals set in this formal review. An employee’s ability to meet these established goals is almost equal parts employee and manager responsibility.

Conclusion

Performance reviews are effective, and both informal and formal reviews are important to a manager’s relationship with their employees. When managers have an open line of communication – during good times and bad – it makes for a better work experience for everyone. Most employees want to grow and improve, and managers are the leaders who can help make that happen!

October 3, 2022

What is the FUTA tax rate for 2022?

Employers pay a variety of federal, state, and local taxes. One of these taxes is Federal Unemployment Tax – more commonly referred to in payroll parlance as “FUTA.”

All employers must pay FUTA, which funds the Federal Unemployment Trust Fund administered by the Department of Labor (DOL). The FUTA tax rate is 6%, and employers can usually receive a FUTA tax credit of 5.4%. Employers in some states may owe more tax due to what’s known as a FUTA tax credit reduction.

This article will provide some background on FUTA and the FUTA tax credit, and then review which states are considered FUTA tax credit reduction states in 2022.

What is the FUTA tax?

Under the Federal Unemployment Insurance Tax Act (FUTA), the federal government levies a tax on employers covered by a state’s unemployment insurance program to fund the Federal Unemployment Trust Fund administered by DOL.

The fund is used to supplement the cost of extended unemployment benefits during times of high unemployment. It also serves as a loan resource which states may borrow from to pay unemployment insurance benefits to their residents. The FUTA tax covers the administration costs for all unemployment insurance and job service programs in all states.

The standard FUTA tax rate levied on employers is 6% applied to the first $7,000.00 in wages paid by the employer to the employee (FUTA wage base). However, employers may receive a FUTA tax credit of 5.4% when they file their annual Form 940 Return if they pay their state unemployment taxes in full, on time, and the state is not determined to be a credit reduction state.

What is a FUTA credit reduction?

Depending on which state you operate in, you may end up with a higher FUTA tax.

This is because some states have outstanding balances on loans taken from the Federal Unemployment Trust Fund. If that’s the case, the 5.4% FUTA tax credit employers typically enjoy is reduced.

Specifically, if states have outstanding loan balances on January 1 for two consecutive years, and do not pay the full balance by November 10 of the second year, then the FUTA tax credit is reduced until the loan is repaid in full. This results in a higher tax due from the employer on its annual Form 940 return.

What is the amount of the FUTA credit reduction?

The amount the credit is reduced is .3% per year, for each year the loan remains unpaid. So, that means that most states subject to a credit reduction will only get a credit of 5.1 rather than the standard 5.4.

Which states/jurisdictions have a FUTA credit reduction in 2022?

There are four states with a FUTA credit reduction in 2022: California, Connecticut, Illinois, and New York.

Nine states and one jurisdiction faced a potential FUTA credit reduction in 2022. However, five of these states repaid their loan balance before November 10, 2022 thereby avoiding a FUTA credit reduction. Four states – California, Connecticut, Illinois, and New York – had an outstanding loan balance on each January 1 from 2021 through 2022, and did not repay all their advances before November 10, 2022. Therefore employers in these states face a 0.3% credit reduction. The US Virgin Islands had an outstanding advance on each January 1 from 2010 through 2022, and did not repay all outstanding advances before November 10, 2022. The US Virgin Islands applied for a waiver of the fifth year (BCR) add-on and was determined to be eligible for the waiver, therefore employers in the US Virgin Islands will face a 3.6% credit reduction.

Employers in these states and the U.S. Virgin Islands should plan accordingly for the higher FUTA tax liability for 2022. Remember, increased FUTA tax liability is assessed in Quarter Four and due by January 31 of the following year.

Additional resources for employers subject to the FUTA tax credit reduction can be found on the IRS website as well as the U.S. Department of Labor website.

June 30, 2022

UPDATE: Florida’s DE&I prohibitions blocked by federal judge

UPDATE: Florida’s Prohibition on Certain DE&I Trainings as Condition of Employment blocked by Federal Judge.

On July 1, 2022, House Bill 7, went into effect in Florida prohibiting employers with fifteen (15) or more employees from requiring some types of diversity, equity and inclusion training for their employees which endorse eight specific concepts about discrimination. A lawsuit, together with a motion for preliminary injunction was filed by Honeyfund.com, Inc. and others (including diversity and inclusion training consultants) alleging that the Act violates their right to freedom of speech under the First Amendment. On August 18, 2022, Chief Judge for the US District Court for the Northern District of Florida Mark E. Walker granted the motion for a preliminary injunction, prohibiting enforcement of the law until further notice, citing that the law violates freedom of speech protected by the First Amendment. A copy of the 44-page opinion can be found here, where Chief Judge Walker refers to Florida as the “First Amendment upside down”, citing Netflix’s hit streaming show Stranger Things, and states that the Court is once again called upon to pull Florida back from the brink.

Employers should continue to monitor the situation as it develops and consult legal counsel with any questions or concerns as to their specific situation.

Recruit & Hire

Manage & Engage

Key details for Colorado employers:

How is FAMLI determined?

How is FAMLI headcount determined?

What is the employer contribution for FAMLI?

What are the eligibility requirements and qualifying reasons for FAMLI?

How can employees use FAMLI, and what are the benefit amounts?

What are the Massachusetts PFML “Top-Off” Rules?

How is an Employee’s Individual Average Weekly Wage (IAWW) Calculated?

Employers Must Have a “Leave Administrator” Registered with the DFML

How Does PTO Affect an Employee’s Eligibility for Benefits?

What are the Massachusetts PFML Contribution Rates for 2024?

What is the Massachusetts PFML Maximum Weekly Benefit for 2024?

Florida E-Verify Compliance

Florida E-Verify and Unauthorized Aliens

Employer Action Items

Background

What are some examples of reasonable accommodations for pregnant workers under the Act?

What is Prohibited Under the PWFA?

Other Laws Applicable to Pregnant Workers

Employer Takeaway

What is Business Email Compromise?

How to identify a fraudulent email

From Name and Email Address Mismatch

Sense Of Urgency

Issues With the Signature

No Voided Check

Mismatched email domains

Suspicious links or unexpected attachments

Conclusion

Background

Employer Takeaway

What are the FLSA white-collar exemptions?

What should employers expect?

Background

Michigan Paid Medical Leave Act

What is an Eligible Employee under the Michigan Paid Medical Leave Act?

Michigan Minimum Wage

Background: What is the New York State Pay Transparency Law?

When Does the New York Pay Transparency Law Take Effect?

What Are the Recent Amendments to the New York Pay Transparency Law?

Employer Takeaway

When Does Illinois Paid Leave Take Effect?

Who is Covered by Illinois Paid Leave?

Accrual and Use of Illinois Paid Leave

Illinois Paid Leave Notice Requirements

Employer Responsibilities Under Illinois Paid Leave

Penalties and Enforcement

General Notice

Eligibility and Rights and Responsibilities Notice

Designation Notice

Action Items

New Hampshire Paid Family and Medical Leave Qualifying Events

New Hampshire Paid Family and Medical Leave Tax Credits

Is New Hampshire Paid Family and Medical Leave Mandatory?

New Hampshire Paid Family and Medical Leave Alternatives

New Hampshire Paid Family and Medical Leave Payroll Deductions

What is the Contribution Rate for New York Paid Family Leave for 2023?

What is the Maximum Weekly Benefit for New York Paid Family Leave for 2023?

Background on the Oregon Equal Pay Act (OEPA)

Maryland Definition of Employment Harassment Altered

Maryland Statute of Limitations Tolled for Unlawful Employment Practice Suits

Disability Accommodations Extended to Applicants for Employment

How To Keep the Performance Review Focus on Individual Employee Growth

What an Informal Review Should Look Like

What a Formal Review Should Look Like

Conclusion

What is the FUTA tax?

What is a FUTA credit reduction?

What is the amount of the FUTA credit reduction?

Which states/jurisdictions have a FUTA credit reduction in 2022?

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Company & Resources