Compliance Issues for the Rest of 2022

Even though we are well into 2022, there are compliance issue changes on the horizon involving overtime, booster shots and paid leave. Here’s what the changes could mean to your company this year.

Overtime Rule

The U.S. Department of Labor (DOL) is expected to update its overtime rule this month. As part of the Fair Labor Standards Act (FSLA), the overtime rule sets a threshold salary level for employers to use to determine which employees are eligible to receive overtime pay when they work more than 40 hours in a single workweek.

An employee who qualifies for overtime usually is paid hourly and is referred to as a non-exempt employee. The overtime rule does not apply to exempt employees who are paid based on an annual salary above the FSLA threshold and hold executive, administrative, professional, computer, and outside sales roles in a company.

The current overtime threshold is $35,568 per year or $684 per week and was set during the Trump administration. The DOL has indicated that the threshold, which was instituted in 2020, is too low. Some advisors want the minimum salary threshold to be as high as $85,000 per year to qualify as an exempt employee. During the Obama presidency, there were calls to raise the threshold to $47,476. The Biden administration has signaled its desire to return to the approach attempted by the Obama administration and there have been discussions to review the rule regularly.

Some states and municipalities also are adjusting their employee salary thresholds, so you must check local requirements.

If the threshold is changed, you will need to recalculate the exemption status of all employees whose salaries fall under the new rule. For instance, if you employ 15 people who make $40,000 annually but the threshold is raised to $45,000, these employees may need to be compensated with overtime wages if they work more than 40 hours in a workweek. You also will need to rework your budget to account for the new required overtime wages.

If you misclassify your employees, it can be a costly mistake and lead to other noncompliance issues regarding attendance, timesheets, payroll, and benefits to avoid this mistake, you can reference the FLSA and current overtime provisions, or the North American Industry Classification System for a breakdown of how to classify most jobs by industry.

Booster Shot Policies

Employers who feel it is necessary for their employees to be fully vaccinated against COVID-19 will face a new legal question as they formulate their policies.

The biggest question with the appearance of the Omicron variant is, “What is fully vaccinated?” The U.S. Centers for Disease Control and Prevention (CDC) currently does not include booster shots in its definition of “fully vaccinated.” The CDC considers full vaccination to take effect two weeks after the second dose in a two-dose series, such as the Pfizer or Moderna COVID-19 vaccines, or two weeks after a single-dose jab, such as the Johnson &Johnson shot.

Employers must decide whether to impose booster requirements for their employees, contractors, vendors and guests. And, without CDC guidance, you must determine whether this will become a legal issue if you require a booster.

Paid Leave Laws

While the U.S. Family and Medical Leave Act (FMLA) entitles eligible employees to unpaid family and medical leave, some jurisdictions in 2020 and 2021 enacted or expanded personal and family paid leave laws.

This trend and the disparity of paid leave laws is expected to continue in 2022. For example, four states and Washington, D.C. are either adding paid leave, modifying existing leave laws or making changes to unpaid leave legislation this year. The states that plan to change their laws in 2022 include Colorado, Connecticut, California, and Oregon.

To complicate the matter, states without paid sick-leave laws have passed laws barring local governments from enacting their own requirements according to a new study conducted by the NYU School of Global Public Health. The majority of the workers affected were lower-wage workers whose employers often do not provide sick-leave benefits.

The Bureau of Labor Statistics data indicates that paid sick leave was available to 77% of the private workforce in March 2021, but only 59% of workers in service occupations and 33% of the lowest-earning earning 10%of workers had access to paid leave.

Consult the state labor law guide to learn more about other employment laws in your area.