The pandemic has reshaped the regulatory landscape and created uncertainty for businesses, especially around compliance. As a result, HR and payroll services provider Paychex has identified some of the top regulatory challenges businesses may face in 2022:
Workplace Safety: Litigation, as well as some state Occupational Health and Safety Administrations and Labor departments have created challenges and compliance complexities for businesses beyond the normal requirements for workplace safety.
The federal OSHA COVID-19 Vaccination and Testing Emergency Temporary Standard, in effect as of December 17, 2021, requires specific actions and deadlines for compliance by businesses with 100 or more employees. Enforcement of the rule could change based on a decision by the U.S. Supreme Court.
Businesses in some states also are navigating other workplace safety measures related to COVID-19. For example:
- New York and California have mask mandates in place in indoor public places for all individuals (vaccinated and unvaccinated), although some counties in those states are proposing legislation to override the mandate.
- Colorado has left mask mandates up to local jurisdictions.
Business owners must also be cognizant of additional laws that the Equal Employment Opportunity Commission enforces regarding the requirement for reasonable accommodation and non-discrimination based on disability and religion.
All of this comes at a time when owners have invested money to adapt their businesses to previous COVID-19 safety regulations that are still visibly apparent – dividers separating employees and customers at a counter, stickers and placards denoting the number of individuals who can sit at a table, remodeled facilities and scaled-back seating in some areas of the country trying to bring employees back to the workplace.
Paid Leave: Paid leave, particularly the legislation passed and workplace policies that were developed during the pandemic, has the potential to have the most-lasting impact on businesses and their employees. COVID-19-related paid family and sick leave legislation that began at the federal level – and has since expired – was passed in a variety of forms by many state and local jurisdictions. At one point during the pandemic, as many as 20 counties and cities in California alone put paid leave laws on the books.
Many state and local mandates that cover paid sick time, family leave and vaccination leaves are expected to continue into 2022.
There is interest at the federal level for legislation creating more permanent paid family leave, and the U.S. House of Representatives passed the Build Back Better Act with a provision that would guarantee U.S. workers four weeks of paid leave for the following qualified reasons:
- New parents
- Their own serious medical condition
- Need to care for a loved one with a serious medical condition
At the state and local levels, there is a growing trend toward universal paid leave or “paid leave for any reason.” Maine and Nevada already have passed laws including this type of leave.
Keeping track of requirements under applicable laws and how such laws overlap can be complex. Employers should prioritize developing and implementing workplace paid-time-off policies that comply with applicable leave laws and fit their business needs.
Tax Changes: The topic of taxes is always top of mind for employers, especially how business decisions related to COVID-19, coupled with the different rules and funding mechanisms of each state, might impact state unemployment rates.
Consider the issue around COVID-19 vaccinations. Businesses have lost employees who chose to separate from the company because of vaccination mandates the business was required to implement or that it chose to implement. Generally, when workers voluntarily leave or are terminated for not meeting company rules, they are not entitled to claim unemployment benefits.
However, some states recently have changed their unemployment insurance rules to allow workers to claim unemployment benefits in certain circumstances, even if they refused to comply with a vaccination mandate. This approach could significantly impact state UI trust funds and employer tax rates.
The Biden administration also has proposed the IRS be allocated more funding to increase enforcement through enhanced technology and the hiring of more agents. Businesses should be consulting with their accounting and legal advisors to stay on top of these changes and help decrease the likelihood of an audit.
Worker Classification: The U.S. Department of Labor recently withdrew the prior administration’s ruling designed to simplify the classification of workers as independent contractors, leaving open the possibility that the agency might be looking to propose a new rule. Such a rule could expand the number of workers considered to be employees under the Fair Labor Standards Act – so employers need to monitor legislative developments and court challenges, including those involving the classification of certain app-based workers. Lawsuits and state-level ballot initiatives addressing worker classification in this area is expected.
Businesses will continue to be challenged in their efforts to comply with multiple laws and agency guidance when determining worker status, applying wage and hour and tax laws or eligibility for fringe benefits, not to mention the risk of penalties for worker misclassification.
Employee Privacy: Few things have impacted privacy issues as the pandemic, particularly workplace screening measures related to vaccination and/or testing for the virus. Employers had to implement policies in reaction to vaccination mandates while balancing the needs of the business against employee privacy expectations relating to the use of the personal information.
With two vaccination mandates – the OSHA Emergency Temporary Standard for large employers and the Centers for Medicare and Medicaid vaccination mandate for healthcare workers – that could impact businesses nationwide, this is a good time for employers to review and potentially update their privacy policies. It is crucial that these policies adhere to federal and state laws and are clear and transparent about the collection, use and storage of information obtained during screening.
For example, businesses in California have to be aware of the CA Consumer Privacy Act that grants individuals more control over their personal information that employers collect: providing opt-out from the selling of information, the right to delete certain information collected and a right to be notified at the point of data collection.
Technology solutions developed to help employers with COVID-19 screening measures also come with privacy concerns businesses must address. Several states have enacted biometric data privacy laws – Illinois, Texas, Washington, Arizona are just a few – while the New York Privacy Act of 2021 requires private employers provide, upon hire to employees, written notice of any electronic monitoring that might occur regarding the employee. The California law restricts an employer from tracking an employee’s location without employee consent. Other U.S. localities have banned facial recognition technology in the government.
There is much businesses must consider when developing and/or updating their privacy policies, so consult with legal counsel to ensure all applicable laws of your state have been taken into account.
Cannabis in the Workplace: Although cannabis remains an illegal drug under federal law, states and local jurisdictions continue to propose and pass legislation that addresses decriminalization of marijuana, recognition of medical marijuana use and legalization of recreational marijuana.
Recreational marijuana use is legal in 19 states and the District of Columbia.
Businesses should consider how this will impact risk mitigation strategies, including adaptations to accommodate use of medical marijuana, and changes to existing parameters of drug testing programs.
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