States and local jurisdictions are continuing to advance employment-related laws and regulations intended to protect workers. To help business owners remain aware and informed of the changing landscape, Paychex, Inc., a leading provider of integrated human capital management solutions for payroll, benefits, human resources, and insurance services, is reporting the top employer laws and regulations accelerating with state and local governments across the U.S.
“From sexual harassment prevention to evolving drug laws, over the past couple of years, we’ve seen a significant increase in the number of state and municipal regulations impacting employers,” said Martin Mucci, Paychex president and CEO. “We’re keeping a close eye on these issues, so that we can keep our customers informed no matter where they operate.”
Here are the top regulatory issues identified by Paychex affecting employers at the state and local level:
#1 Sexual Harassment Prevention
Since the #MeToo movement rose to prominence in late 2017, state lawmakers across the country have been reviewing existing laws and regulations around sexual harassment prevention in the workplace. The result has been a spike in legislative proposals, including provisions impacting non-disclosure and arbitration agreements, expanding protections to non-employees, and strengthening prevention efforts to include mandatory policies and interactive training. Legislation was passed in several states and many others have pending legislation in this area. California, Maine, Connecticut, New York, and Delaware have passed mandatory sexual harassment prevention training requirements, but perhaps the most impactful development this year is New York State’s mandatory sexual harassment prevention policy and training requirements applicable to all employers. While several other states require or strongly encourage similar training, there will likely be a trend for more mandatory requirements in the future. Employers should consider implementing a sexual harassment prevention training program before it becomes mandatory in their state.
#2 Evolving Drug Laws
Though marijuana and marijuana-related products are generally considered Schedule I drugs under the Controlled Substances Act by the Drug Enforcement Administration (DEA), today, 46 states and Washington D.C. have enacted legislation allowing the consumption of marijuana or Cannabidiol with or without prescriptions. In December 2018, the 2018 Farm Bill was signed into law and legalized hemp, which will now be treated as a highly regulated crop. In states where recreational and/or medicinal use is permitted, employers are faced with difficulties in navigating workplace drug policy enforcement. Some states, such as Arizona and Nevada, have begun to protect workers who are prescribed marijuana through anti-discrimination laws. However, in these states employers may still be able to terminate or deny employment if the worker using marijuana is in a role that may put themselves or others in danger, for example, if the worker is a machine operator.
#3 Paid Leave Laws
Paid leave laws continue to trend in state and local legislatures, though paid family leave legislation currently lags behind the number of paid sick leave laws. Paid sick leave laws in Maryland, New Jersey, Rhode Island, and Washingtonwent into effect in 2018, bringing the total number of states with paid sick leave laws to 10 plus the District of Columbia. The state of Michigan passed a similar law this year that is scheduled to go into effect later in 2019. Massachusetts was the only state to pass paid family leave legislation in 2018, joining California, Rhode Island, New Jersey, New York, the District of Columbia, and the state of Washington offering or soon to be offering paid family and medical leave to covered employees. In general, these laws provide leave for both qualified family and medical reasons.
#4 Health Insurance
As part of the Tax Cuts and Jobs Act of 2017, the federal individual mandate penalty was made zero beginning in January 2019. States were concerned that this change would correlate to premium increases and decreased coverage levels in the individual market, so some began considering a state-level individual mandate as a preventative measure. New Jersey, Vermont and the District of Columbia joined Massachusetts in enacting an individual mandate law, with Massachusetts enacting its individual mandate law in 2006 prior to the Affordable Care Act (ACA). Vermont’s law requires that many of the constructs of how the individual mandate will function, including the penalty/enforcement mechanism, be enacted during the 2019 legislative session prior to its effective date in 2020. Employers should be aware of how a state- or district-level mandate may affect employee demand for health insurance coverage, especially in the current tight labor market where benefits are increasingly important to employees and candidates. Self-insured employers also need to be aware of state-specific health insurance coverage reporting requirements.
#5 State Retirement Plans
According to Paychex research, more than half (53 percent) of small business owners don’t have a formal retirement savings program at their business. Several states have acted to combat this retirement savings gap by establishing state-facilitated savings programs using one of four models: auto-IRA, multiple employer plan (MEP), marketplace, or voluntary payroll deduction IRA. Currently, 10 states, including California, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, New York, Oregon, Vermont, and Washington, have enacted legislation to implement a retirement savings program for private sector workers. An additional 31 states, including Arizona, Georgia, Kansas, Pennsylvania, and Texas, are conducting studies or have proposed legislation to create a retirement savings program to support workers.
#6 Consumer Privacy and Protection
As the public becomes increasingly interested in how well the companies they deal with protect their sensitive data, many states are enacting or broadening privacy regulations. In addition to the usual requirements for a sound data security process, some states are requiring that consumers have the right to know what data companies are collecting on them and the ability to opt-out of that data being sold or distributed without their consent. The definition of ‘personal information’ is also expanding in many places to include items such as biometric data, geolocation and health-related factors. Many business groups, concerned with the difficulties of complying with an array of different state laws, are calling for a single federal standard. Given the regulatory, legal and reputational considerations, this is an area for all businesses to keep an eye on.
Sharon Sorcenelli, president of Skippy Corporation, which operates a wine and spirits retail store in Plymouth, Massachusetts, sees the impact of expanded state regulations firsthand. “It is very difficult to balance all of the new state and federal mandates that require reporting and more payroll costs. Fortunately for us, our business is doing well, but for other small businesses, all the new mandates and costs can be crippling,” said Sorcenelli.
For up-to-date compliance and regulatory news and resources from Paychex, visit www.paychex.com/worx.
Note: The information contained within is not legal advice. These issues are complex and applicability depends on individual circumstances. Businesses should consult legal counsel before taking action on any of the items identified above.