The coming New Year brings a slew of new employment-related laws on the state and local levels. And with coming changes on all levels of government as a result of the November elections, you can expect to see additional law changes, some of which may be effective in 2017.
What’s a small employer to do to stay compliant?
What to look for
State and local governments may enact their own employment laws if more stringent than federal law. For example, a city may impose a higher minimum wage rate than the federal minimum wage rate. In reviewing the laws that apply in your locality, be sure to check whether they cover the size of your company; some laws may exempt certain small employers.
Here are some of the more common types of annual changes that may impact your business:
- Minimum wage increase. Determine if there is any change in your locality. For example, in California, employers with more than 25 employees the minimum wage rate rises to $10.50 per hour; it remains at $10 per hour for employers with 25 or fewer employees. However, some localities (e.g., San Francisco) have higher rates ($13 per hour through June 30, 2017; $15 per hour starting July 1, 2017).
- Mandatory retirement plans. Under federal law, setting up a qualified retirement plan for employees is voluntary. However, now that the Department of Labor has issued a final rule that state programs for non-government employees are not “pension plans” subject to ERISA requirements, states that have been contemplating mandatory plans (most in the form of payroll deduction arrangements) can now take effect. For example, the California program goes into effect on January 1, 2017, and applies to employers with five or more employees and that do not offer a qualified retirement plan. A similar program is expected to go into effect in Illinois and Oregon in June, while Washington’s program should start earlier in 2017.
- Ban to asking about a criminal record. The “ban the box” concept removes questions about a job applicant’s conviction history from a job application in the private sector, although some locations permit questions about criminal history once an applicant is deemed otherwise qualified for a job. Connecticut’s adoption of this concept takes effect on January 1, 2017; Vermont’s law goes into effect on July 1, 2017.
How to keep up
It’s a challenge for small employers that lack HR departments to keep up with employment-related law changes with which they must comply. If you’re in this category, here are some ways to check for relevant law changes so you can adapt accordingly:
- State labor department. Find links to your state through the U.S. Department of Labor
- Payroll company. If you use an outside payroll company, such as ADP or Paychex, likely you’ll receive employment law information.
- Your business attorney. If you routinely work with an employment law attorney, such as for workers’ compensation matters, you may be informed by your attorney about employment law changes. If you work with another type of attorney, such as one who handles your contracts or leases, don’t expect to receive any alerts about employment law changes you should know about.
- Online resources. For example, you can check for state-based retirement plan initiatives from the Pension Rights Center, and for “ban the box” adoption from BLR.com. It is advisable to verify any information you find online with your state labor department or your attorney.
Because your failure to follow the law can result in penalties that can cost you dearly, you need to be proactive in staying up on any changes that impact your business. The sooner you investigate changes for 2017, the better prepared you’ll be.