What U.S. Employers Need To Know About Rapidly Evolving State And Local Regulations

Top 5 employer regulations to note

It’s been said that change is the only constant in life. In this day and age, HR leaders can certainly relate. Over the past couple of years, employers have seen a dramatic increase in the number of state and local regulations impacting their businesses and workers. From offering benefits such as healthcare and retirement to policies regarding drug use and sexual harassment, the uncertainty these new regulations present can be significant.    

 

To help HR professionals keep up with the latest, here are the top five employer regulations advancing with state and local governments across the U.S., along with suggested next steps you should keep in mind as these laws advance:

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. Perhaps the most impactful development this year is New York State’s mandatory sexual harassment prevention policy and training requirements applicable to all employers.
 

What now? All employers should consider implementing a sexual harassment prevention policy and training program as a proactive measure to mitigate their exposure to litigation and before such requirements may become mandatory.  

Though marijuana and marijuana-related products are generally considered illegal “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 for medicinal purposes and, in some cases, recreational use. In December 2018, the 2018 Farm Bill was signed into law and began the process to legalize hemp, which will be treated as a highly regulated crop.
 

What now? In states where recreational and/or medicinal use is permitted, employers are faced with difficulties in navigating workplace drug policy enforcement. Employers should become familiar with federal restrictions as well as new anti-discrimination laws which may have been passed in response to new drug 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 Washington went into effect in 2018, bringing the total number of states with paid sick leave laws to 11 plus the District of Columbia. The state of Michigan passed a similar law this year that was effective on March 29th and Maine recently passed a paid sick leave law that will be effective in 2021. 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.

What now? Employers should plan ahead so they’re not caught off guard if an employee takes leave. This includes understanding how to navigate the process, coordination with other leaves, what to document, what questions to ask, and contingency planning to manage the employees left behind.

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. 
 

What now? 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. 

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.

What now? 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. Knowing they’ll likely have to provide some type of retirement plan for their employees, employers must weigh the benefits of relying on state-sponsored plans or offering a more traditional plan of their choosing.

 

Whether at the federal, state, or local level, keeping up with regulations is a challenge for today’s HR managers. Employers should consider leaning on their payroll and HR solutions providers who have compliance expertise in evolving areas of employment law. To view an infographic highlighting which states and municipalities are taking legislative action on the topics above – those with both passed laws and ballot initiatives.

 


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.