HR Alerts
ACA’s Automatic Enrollment Provision Repealed
One provision of the Affordable Care Act (ACA) that had yet to be implemented was a requirement that an employer with 200 or more full-time employees automatically enroll new full-time employees in one of its health benefit plans. This provision would have created an opt-out system rather than the current opt-in system for coverage under an employer’s plan. While this provision became law in 2010, implementation was delayed pending regulations from the Department of Labor.
Now the automatic enrollment provision has been abandoned entirely. On November 2, President Obama signed the Bipartisan Budget Act of 2015, which included a repeal of the automatic enrollment. The repeal isn’t surprising, but it may come as a relief to employers who felt the need to plan for the provision to go into effect. As the automatic enrollment was not operational at any point, no action is required from employers in response to the repeal.
Checking in on the Proposed White Collar Overtime Rule Changes
Content: The proposed changes to the white collar exemptions of the Fair Labor Standards Act (FLSA) are looming large in the minds of many employers. These rules, proposed in June 2015 and expected to be finalized sometime in 2016, would more than double the salary threshold for workers otherwise eligible for a white collar exemption from minimum wage and overtime requirements under the FLSA.
What do we know and what are we still waiting to find out about?
We know that if the final rules adopt the salary level of the proposed rules (of about $50,440 per year), employers could lose the exemption from the FLSA wage requirements for almost five million currently exempt workers who would then be eligible for overtime wages. We also know that, if the final rules follow the proposed rules, the $50,440 salary level is not the only increase that will be seen.
The rules propose having the white collar salary level (and the highly compensated employee compensation rate, which the rules also address) automatically increase each year. These would be tied either to a cost of living index or to a set percentile of earnings across all salaried workers.
We also now know more about the objections to this proposed rule. There were over 250,000 comments submitted during the 90-day comment period. Last time changes to these rules were proposed, in 2003, there were approximately 75,000 comments. Clearly, this is something that people are talking about.
Concerns and complaints about the proposed rules were varied, but several topics came up again and again. Many negative comments concerned the size of the increase. Business owners said the proposed increase would be a significant hardship. Some suggested choosing a salary level somewhere between the current and proposed levels. Others recommended a gradual increase instead of the sudden jump.
Business owners also worried that the employees themselves might not appreciate the changes. They fear a drop in morale if currently exempt workers are reclassified as non-exempt under the new rules. These workers might not want to track time, and they might feel their work is less valuable if they are paid on an hourly basis.
Another common complaint about the proposed salary level was that it does not take location or industry into account. Business owners located in regions with lower costs of living pointed out that this large increase would hit them much harder than it would those operating in areas with higher costs of living.
Commenters in favor pointed out that the new rules will significantly reduce the misclassification and exploitation of low wage workers, and will bring the salary requirement back in line with the intentions of the FLSA exemptions, which are to allow employers to pay workers in prestigious and well-paid positions on a salary basis, while ensuring that lower paid and less educated workers have a right to a limited workweek.
At this point, we know what the proposal is and we know what people who commented think about it. There are, however, still quite a number of question marks around these changes.
We do not know exactly what the final rules will look like. The Department of Labor (DOL) is required to review the comments. It can respond to them, although it is not required to do so. It’s also not required to make any changes to the proposed rules because of the comments. In fact, the DOL could issue final rules that are identical to the proposed rules. Most commentators, though, seem to think that some changes will be made. Many think that the salary level of $50,440 will be reduced. However, given that the intent of these changes to make more workers eligible for overtime, it is unlikely that the number will be reduced as much as many business owners would like.
We also do not know the timeline for when the final rules will be issued or when they will go into effect. In 2004, the last time these rules were updated, a little over a year passed between the proposed rules and the final rules, and the final rules went into effect about four months after they were published. If the timing remains the same this time around, we expect to see the final rules in July 2016 with an effective date of sometime in November 2016.
There has been some speculation that the DOL would try to move a bit more quickly this time in order to get the rules in place well ahead of the upcoming presidential election and the end of President Obama’s term. Some commentators have even predicted that we might see the final rules as early as February 2016. Recently, however, at a panel discussion at an American Bar Association conference, the Solicitor of Labor said that the DOL did not expect to issue final rules until “late 2016.” Nevertheless, the DOL could decide to act sooner.
So, what should business owners be doing to prepare for these changes? Here are our recommendations:
Determine which of your exempt employees could be affected.
Consider for each employee whether it would be better (both in terms of morale and finances) to reclassify them as non-exempt or to raise their salary to the new exempt level.
If you expect a lot of your employees will become non-exempt, consider hiring additional workers to minimize incurred overtime.
Decide how you want to communicate these changes to your employees to minimize any drop in morale.
Question & Answer
Q: We’ve hired some new employees who live and will work out of state. How do I handle the validation of the required I-9 documents?
A: I-9 forms present a challenge to employers who hire remote employees. The U.S. Citizenship and Immigration Services (USCIS) requires that all documents required for the I-9 must be viewed in their original format. Therefore, a fax or scan is not acceptable. Instead, the original documents must be in-hand when the I-9 is completed and signed by a company representative.
Here are a few options, each of which must be done within three days of the new hire beginning work:
Have the new hire’s manager or other person responsible for I-9 verification in your office travel to the remote location and complete the I-9. This person should carry out full I-9 responsibilities, completing all sections of the I-9.
Have the new hire travel to your location for onboarding and training, and complete the I-9 during that time.
Find someone to act as an authorized company representative for this one-time purpose of verifying documentation and completing the I-9. This representative may be any individual, although notaries public are the most common choice. Be aware that some notaries cannot or will not sign Section 2 due to state notary regulations. If a notary does act as your representative, they should not apply their seal on the Form I-9.
Whatever route you choose, remember that you remain liable for any violations in connection with the form or the verification process. Whenever possible, we recommend bringing the employee to your main location for paperwork, onboarding, and training.
Reduce, Reuse, Recycle: Nine Ways to Keep Your Office Green
Recycling is not a new concept, but the ways in which we can recycle are increasing faster than ever. Everything from printer toner to food waste can now be properly reused, recycled, or composted. Recycling in the office just takes a little extra encouragement and dedication.
Here are some simple suggestions to keep your office green:
Offer paper recycling. Put a paper-recycling receptacle next to each printer, copier and fax machine. Discuss recycling with your cleaning crew or appoint a person to bring your paper to a recycling center each week.
Switch to recycled office supplies whenever possible, such as high post-consumer recycled content paper.
Recycle your ink and toner cartridges. Office supply companies like Staples and Office Depot will take your old cartridges and give cash incentives for recycling them!
Donate functioning old laptops, printers and other office equipment to charity organizations.
Buy higher end office equipment so you need to replace items less frequently; cost per use is a useful financial metric.
Encourage employees to shut down their computers when they leave the office for the day.
Use environmentally friendly cleaning products, which help protect the health of your employees and cleaning staff by eliminating harmful substances and abrasive odors from the office.
Encourage telecommuting, biking, and other green transportation. Your transportation policies can make a huge difference.
Go green — literally. Make your office green with plants! They absorb airborne pollutants (which are widespread with off-gassing office furniture), and emit healthy negative ions and oxygen into the air.
If you’re looking for information on recycling options and programs, we recommend checking out sites like http://www.recyclerfinder.com/ that provide comprehensive information about recycling in your area.
Tool of the Month:
Minimum Wage Chart 2015-2016
As of December 2015, the Federal minimum wage is $7.25 per hour, but many states enforce their own higher minimum wage. This chart compiles and compares the minimum wages of all fifty states and Washington D.C. Remember, where the state and federal minimum wage differ, the higher amount must be paid.
