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Employment Law Annual Checkup — Which Laws Apply to You?

Hannah Beppel Hannah Beppel

two young employees comparing notes on a computer tablet

Laws that affect employers have been rapidly evolving. With more states passing legislation, it's no surprise that keeping up with employer obligations has become a challenge.

Many employers are left wondering whether specific laws apply to them and how to make changes if they do. Employers who don't comply with state laws could open themselves up to considerable legal, financial and reputational risk. Ultimately, it's the employer's responsibility to know which employment law regulations apply to them and how to ensure they are compliant.

With that in mind, Samantha Munro, senior counsel at ADP, and Kevin Skelly, senior counsel at ADP, teamed up in an on-demand webinar to tackle complex compliance updates, discuss strategies for employers and review the latest legislative and regulatory updates. This article covers the main points, but for a deeper understanding, launch the webinar: Employment law annual checkup.

What is the new IRS Electronic Filing Mandate?

The new IRS electronic filing mandate requires employers that file more than ten filings annually to e-file. This is a significant change from the prior requirement for an e-file, which was 250. The change took effect at the beginning of the year, so employers should keep this in mind.

What are some examples of pay transparency laws that might affect me?

California's pay transparency law requires California employers with 15 or more employees to include a pay scale — also known as pay or salary range — on all external job postings, even ones posted by third parties if the position may ever be filled in California, either in-person or remotely. To be covered, an employer must have at least one of the 15 employees currently located in California. A pay range is not required to be posted on internal job postings but must be provided upon employee request. Employers with fewer than 15 employees are not required to post pay scales on job listings but must provide pay scales upon request by internal and external applicants. Fines for non-compliance are up to $10,000 per violation.

New York City's pay transparency law prohibits employers with four or more employees, at least one of whom is in New York City, from advertising job promotions or transfer opportunities that would be performed in New York City without a salary range. Fines assessed for non-compliance are $125,000.

New York state's pay transparency law applies to NY employers with four or more employees. They must disclose the salary range in any ad for a job, promotion or transfer opportunity internally or externally that will be physically performed, at least in part, in the state of New York. This does not apply to remote positions but to roles that report to a supervisor, office, or other workers in New York. Fines for non-compliance are up to $3000.

What's new with state pay transparency laws?

The California Civil Rights Division (CRD) requires private employers with 100 or more employees (with one or more employee in California) to submit a pay data report covering the prior calendar year on or before the second Wednesday of May each year. Initially enacted in 2020, the state has released updated frequently asked questions, templates and a user's guide. Employers are also now required to file reports through the portal.

The Colorado Department of Labor and Employment (CDLE) issued guidance on recent changes to their state's pay transparency rules. These changes require employers to disclose pay and opportunities on internal and external job postings and who was selected for the role. Listings must include the hourly or salary compensation range, general description of benefits and any other compensation applicable and the date the application window is expected to close.

The District of Columbia will require employers to disclose pay on all job postings. Beginning June 30, 2024, employers with at least one employee in the District of Colombia must provide the minimum and maximum projected salary or hourly pay in all job listings. Employers must also provide information on the existence or absence of healthcare benefits available to applicants. According to the ordinance, employers in the District of Columbia are also prohibited from screening candidates based on their wage history, including asking prospects, candidates — and employers of candidates — about their earning history.

Munro reminds employers to remove salary history questions from the interview process. "These laws aim to stop the perpetuation of unfair or discriminatory pay. If a person was not paid fairly at their previous job, basing their new pay on their previous salary would continue discriminatory pay rather than bring them up to fair pay for the role."

Check out the Eye on Washington for additional information on recent pay transparency updates.

What is the new ruling on severance agreements?

The 2023 ruling by The National Labor Relations Board (NLRB) prohibits employers from using overly broad confidentiality and non-disparagement provisions in severance agreements. The NLRB decision has broad application and applies to more than just severance agreements; it also includes other types of employment agreements and offer letters.

Skelly reminds employers that they can still protect confidential information and trade secrets, but they need to be specific and narrow about what they request the employee agree to. "It's important that severance agreements be narrowly tailored and focused just on protecting that confidential information. They should not be overbroad in a way that infringes on employees' rights to discuss wages and other terms and conditions of employment."

What is the new federal rule for independent contractors?

The new federal rule for independent contractors requires workers to pass a multi-factor test to be classified as independent contractors. The multi-factor test is an economic reality test comprised of six factors, and employees must pass all six to be considered independent contractors rather than employees. The multi-factor test includes:

  1. Opportunity for profit or loss depending on managerial skill

  1. Investments by the worker and the employer

  1. Degree of permanence of the work relationship

  1. Nature and degree of control

  1. The extent to which the work performed is an integral part of the employer's business

  1. Skill and business-like initiative of the worker

The new ruling went into effect in January 2024. "Now is a good time for employers to review the work responsibilities for their independent contractors to make sure that under this new standard, they will meet the test and not be considered employees," says Skelly.

What is the proposed overtime rule change?

The proposed overtime rule change would raise the minimum salary requirement for workers classified as exempt from $684 per week ($35,568 per year) to $1,059 per week ($55,068 per year). The proposed federal adjustment to the Fair Labor Standards Act would still require exempt employees to perform specific job duties to meet qualifications for exemption from overtime.

Skelly suggests employers prepare now. "If this proposed rule becomes final, the ultimate result will be that more employees will be eligible for overtime. And this proposal is just for federal regulation. Remember, some states have their own standards for this, which may differ from the federal standard."

What are the timeclock rounding rules in California?

The California timeclock rounding rules state employers cannot round minutes before or after mealtimes. California also prohibits employers from using the minimis rule, which allows small, insignificant periods outside the regular work hours to go un-recorded. While rounding is still permitted on other parts of the employee's day, a case pending in the California Supreme Court will likely determine whether time clock rounding can be used under any circumstances in California.

If the Supreme Court decision eliminates timeclock rounding completely, employers will be required to pay employees based on up-to-the-minute punches. However, there's currently no projected timing for the ruling, and whether it will be retroactive is unknown.

While rounding is permitted at the federal level, some states, like California, have enacted their own laws, and employers or employees in those states are required to follow their timeclock rounding regulations. Skelly says that no matter the state, it's always a best practice not to round. "It's best to pay employees for all time worked down to the minute."

The wrap-up

It's essential for employers to stay abreast of changing legislation that might affect them. And while this article covered numerous updates, many others were not mentioned. For details on additional legislative changes affecting employers, launch the on-demand webinar anytime: Employment law annual checkup.