From political landscapes to exemption criteria, prepare for some impactful decisions in 2024.
By Paige McAllister, SPHR, SHRM-SCP
A new year means new employment laws, trends and challenges. While there is no way to capture everything, here are some of the important trends to follow in 2024.
GENERAL TRENDS
Uncertainty: With the volatile political climate heading into the 2024 presidential race, inconsistent predictions for the economy, and escalating incidents of violence, employees are facing new challenges at and outside of work. The workplace should be a physically- and mentally-safe space for all employees so management must establish and enforce policies prohibiting harassment and discrimination which would include limiting conversations, attire and displays that could be offensive or provocative. Management should also take necessary steps to secure the workplace by creating and enforcing policies on workplace violence, weapons and visitors.
Recommendation: Review your policies and practices to ensure all employees are protected from unacceptable actions, speech, and behaviors.
Job market softening: The tight labor market we have been experiencing for the past year or two is starting to soften. Job growth is still consistent but is slowing as businesses prepare for the recession which may or may not come. The unemployment rate has increased slightly but is still low, most recently at 3.9%. With the “Great Resignation” seeming to slow down, employees are not fleeing their jobs as quickly as before, but they still will leave for higher wages, improved benefits, better work-life balance, etc. Experts expect these trends to continue into 2024 with more stability coming to the workforce and economy. As a result, employers may not experience the high turnover as in the past two years but may still have a difficult time filling any job openings they have.
Recommendation: Develop a recruiting plan that includes sufficient compensation and benefits, good candidate search tools, and a thorough and expedient hiring process.
Wage increases leading to wage compression: Wage growth is slowing but is still averaging a 4% increase overall, mostly in response to the increased cost of living. Wage increases along with the rising minimum wage rates in many states are resulting in wage compression where new employees are being paid the same as or close to the amount paid to longer-tenured employees.
Recommendation: Develop a sound compensation plan to ensure you are paying employees fairly based on market rates as well as their experience and contributions to your company.
Limiting the use of restrictive covenants: Legislatures and agencies on both the federal and state levels plan to reduce the use of restrictive covenants such as non-disclosure and non-compete agreements. Legislation has been passed nullifying certain non-disclosures signed as part of a harassment or sexual harassment complaint. Additionally, regulations have been put in place to prohibit non-competes for certain employees such as low-income or non-exempt employees.
Recommendation: Have all restrictive covenants (including confidentiality, non-solicitation and separation agreements) drafted and regularly reviewed by legal counsel familiar with applicable federal, state and local laws to ensure they are enforceable.
FEDERAL LAWS AND TRENDS
National Labor Relations Act: As expected, the National Labor Relations Board (NLRB) is taking more action to protect the rights of all employees in the workplace. Some of their initiatives and rulings include redefining “joint-employer” to expand responsibility to more co-employers; setting tougher standards for handbook and policy language which could appear to infringe on an employee’s rights; and issuing multiple Memoranda of Understanding (MOU) with other federal agencies to better exchange information discovered during investigations which the other may find violate their regulations.
Recommendation: Understand how the NLRB’s ruling applies to your workforce and update your policies and practices to comply.
Changing exemption criteria: The DOL recently released its proposed changes to the minimum salary threshold for white-collar exemptions (Executive, Administrative and Professional). The DOL proposed an increase to $1,059 per week, annualized to $55,068 per year. The proposed salary threshold for highly compensated employees will be $143,988 per year. However, the final threshold may change depending on current wage rates by the time the new rule is implemented. Nothing is finalized yet and legal challenges are expected given the big impacts these adjustments would necessitate.
Recommendation: Prepare to evaluate the salary levels of all exempt employees and plan how to address those whose salaries will not meet the new threshold, usually either increasing their salaries or reclassifying them as non-exempt.
STATE LAWS
As in recent years, the stalemate in the federal government is pushing states, counties and cities to enact their own legislation to move their agendas forward. But, since different areas have different priorities, these laws vary from state-to-state, city-to-city. Here are some of the local and state initiatives you should be aware of.
Expansion of legalized marijuana: Twenty-four states have now legalized the recreational use of marijuana for adults 21 years or older. Thirty-eight states currently permit the medicinal use of marijuana. Some states have also passed laws to protect employees who use marijuana legally off-duty and off-site. Since approval of legalized marijuana is increasing, expect to see it on the 2024 ballot in more states and perhaps relaxing rules federally.
Pay transparency and equity: Several cities and states have enacted laws intended to bring equity to pay practices. These laws include requiring good-faith wage rates to be posted in job ads; prohibiting employers from asking a job applicant for their compensation history; and requiring employers to regularly assess their wage practices to ensure fairness and consistency. Look for these measures to continue to expand in other locations.
Paid time off: More states are enacting paid time off laws. Sixteen states (including Washington, DC) will have paid sick leave as of January 1, 2024, and three states will have paid time off laws that allow employees to use the time for any reason. Other states are expanding their current paid time off laws. Look for additional states and local governments to pass such laws giving employees protected time off.
Paid leave: Nine states and Washington, DC have passed paid family and/or medical leave programs to provide employees with wage replacement during covered leaves. Four additional states have passed paid leave laws which will require employers to start preparing in 2024 and 2025. Given this trend, more states are expected to establish and/or vote on some sort of paid leave program.
Paige McAllister, SPHR, SHRM-SCP, is vice president for compliance at The Workplace Advisors, Inc.
