Regulatory Updates to Watch For in 2021

Over the last year, we’ve learned the importance of anticipating and preparing for change when it comes to the survival of a company. As we continue forward into this year, that includes learning about and readying your business for policy changes from the new administration. To help you prepare, we hosted a webinar featuring Moses Balian, HR Consulting Manager at Justworks, to discuss some of the federal and state-level shifts we might see in the human resources space in 2021. Read on to learn more about some of the key changes that were covered.

As a note, this is the first of what will be many Justworks webinars that will feature SHRM recertification credits for those who are pursuing SHRM-CP or SHRM-SCP recertification.

Paid Family Leave and Paid Sick Leave

Present day

For those who are unfamiliar or need a refresher, states are increasingly enacting laws establishing Paid Family Leave (PFL) programs for covered employers and eligible employees. In most states, PFL is set up like an insurance program funded by employee pay deductions to provide partial pay replacement for employees who need time off to care for loved ones. As Moses discusses in the webinar, most PFL laws often include job protections. While this is not the case in every state, there is often overlap in those cases with federal or state family medical leave laws, like the federal Family Medical Leave Act (FMLA).

State and local Paid Sick Leave (PSL) laws are more common. PSL differs from PFL in that it’s typically only available for smaller allotments of time — ranging from a few hours, to up to 10 days, depending on the jurisdiction. Moses called this the “prototypical sick day,” explaining that employees often use it “for short-term illnesses, for doctor’s visits, or to care for oneself and a loved one.” PFL can usually be taken in these smaller increments as well, but there is generally a much larger allotment of overall time, usually 10-12 weeks, depending on the jurisdiction. PSL laws also differ from PFL in that the leave provided under PSL laws is usually fully paid by the employer, rather than partially paid using employee pay deductions.

Currently, there are no federal PFL or PSL requirements.

The near future

Some states have begun building additional leave programs. Moses pointed out that both Maine and Nevada now require employers to provide paid time off (PTO) that employees can use for any purpose. “This speaks to continuing momentum in many states to provide statutory benefits for employees who have caregiver responsibilities or who want to build a family,” he said.

As states continue taking matters into their own hands, we may start to see movement at the federal level. A few years ago, Congress began discussing a potential nationwide paid family leave act (unofficially named the FAMILY Act) that would significantly expand FMLA in terms of the nature of benefits and to the range of employers it applies to. Currently, many businesses aren’t covered by the FMLA because it only applies to employers with 50 or more employees in a 75-mile radius — the FAMILY Act would qualify employers of any size.

The Families First Coronavirus Relief Act (FFCRA), one of the first bills that was passed in 2020 to provide COVID-19 assistance to employees and employers alike, also served as somewhat of a test run for federally mandated paid sick and family leave, requiring most employers to provide partially paid leave for certain absences related to COVID-19, and providing tax credits to employers to cover the cost.

The leave mandate in the FFCRA expired on December 31, 2020, but subsequent stimulus measures have extended the tax credit for employers who voluntarily continue to provide FFCRA leave through September 30, 2021. However, the question remains as to whether we’ll see any federal mandates beyond the pandemic.

In the meantime, as Moses predicted, Congress passed a massive stimulus bill proposed by the Biden administration, extending tax incentives for voluntarily provided leave (as discussed above) among other changes.

Employee Pay and Classification

When it comes to employee pay requirements and classification of employees, we can anticipate a fair few changes in 2021. Part of this stems from the change in administration — Moses explained that the priorities of the Department of Labor (DOL) and the EEOC change based on who occupies the White House. With Biden leading the charge, we may see these federal agencies (along with others like the NLRB) increase hiring and become more assertive with employment-related rulemaking and enforcement.

Minimum wage

Minimum wage is a major point in this conversation, as it’s fallen behind most state minimum wage rates. It’s important to note that the DOL cannot increase minimum wage. This can only be done through congressional action.

“That’s not a magic wand that Biden or his associates have the power to wave,” Moses explained. “But it is expected that the Biden administration will attempt to champion an increase in the federal minimum wage.” With the current rate being the same since 2009, the highest of any jurisdiction nationwide more than doubles that at $15 an hour. In the time since Moses delivered this webinar, a proposal by the Biden administration to increase minimum wage in the March 2021 American Rescue Plan was ultimately set aside on procedural grounds.

“Now, he can’t change minimum wage by signing an executive order, but the DOL under Biden does have substantial authority in terms of setting rules around who is exempt from overtime and minimum wage requirements,” Moses said. Given how closely Biden worked with Obama on attempts to double the minimum wage during his administration, it’s reasonable to expect Biden to use those policies as a guide for similar efforts.

One thing we can definitely expect to see is progress in gender pay equity efforts. While many states and U.S. cities have already banned salary history inquiries during the job application process, the Biden administration aims to pass federal law “to combat systemic gender pay inequities so that they don’t carry forward to your next employer, so they don’t just cascade onward into the future,” Moses explained.

We may also see Obama-era changes to the EEO-1 demographics reporting requirements revived by Biden’s administration. The goal of this is to show how a company’s gender demographics correspond to the compensation process in place, forcing leaders to look at roles and compensation much more closely.

Worker classification

Independent contractor classification has become an increasingly hot topic in many states throughout the country, which Moses highlighted. “So, the gig economy — we’ve been hearing that for probably a decade now, and it’s only continuing to increase in popularity and utilization.” Knowing that, we’re likely to see the Biden administration address worker classification.

Another reason we’re likely to see Biden’s DOL tackle this topic? In their final days, the Trump administration finalized a clarification to the employee-versus-independent-contractor test under the Fair Labor Standards Act (FLSA). This rule had been set to take effect on March 8, 2021, but has since been set aside by the Biden administration. This continues to be something to keep an eye on as the Biden administration potentially introduces a rule of its own that will likely be less employer-friendly.

Immigration Policy and I-9 Enforcement

H-1B visas and STEM F-1 OPT extension

The process for H-1B visas has long been a lottery of sorts, requiring people to submit petitions that were then chosen randomly to be moved through the application process. The Trump administration proposed a new wage-based allocation process. While there had been reports that the Biden administration favored a similar proposal, the USCIS under Biden has since delayed implementation of these new rules until the end of 2021.

The new rules may have consequences for F1 students. “When someone is a foreign student, they’re an F1,” Moses explained. “If someone graduates from an accredited degree in a STEM field, they get a pretty generous work authorization period after they graduate, and it can be upwards of three years specific to STEM fields.”

Historically, the F1 STEM program has been a bridge to the H-1B program — people move directly from one to the other. The problem is, recent graduates don’t have enough experience to qualify for one of those skilled positions that the H1B program is seeking to fill. However, the Biden new administration has shown support for both programs, so it’s likely this is not the last we’ll hear about changes to the H1-B program.

I-9 enforcement

On the 1-9 front, Moses said we might expect a shift away from workplace immigration raids. Instead, we’ll likely see more enforcement efforts focused on audits, looking more closely at the actions of employers as opposed to those of employees.

Audience Questions, Answered

My company is headquartered in a state where there is no paid family leave law, however we have employees located where it has been passed. What do we do about this?

It’s important to remember that employees are entitled to paid family leave and statutory benefits programs based on their work state — this means that employees who work in a state where such benefits are not available will not be entitled to statutory benefits.

“So if you’re a distributed workforce, some [employees] may receive totally different wage replacement benefits (or none) even if they have a similar job, similar compensation, and similar seniority or tenure with your organization. It’s purely based on geography and what benefits programs they’re eligible for based on where they live and work,” Moses explained.

As legislative changes are bound to arise within the next few mounts and especially March, how will my company be informed of critical changes made by the DOL?

Moses recommends subscribing to The Scoop, Justworks’ monthly legislative updates newsletter created to keep you up-to-date on all of the changes you should be aware of in how to keep your company compliant and grow your business with confidence.

For more from our experts, register here to join our next webinar and submit your own questions, or watch the recordings that are posted after each session. In the meantime, we’ll continue to help you navigate the ever-changing employment landscape by providing timely updates so you can continue working fearlessly through these changing times.