As federal legislative focus has remained firmly on major economic regulations such as healthcare and tax reform recently, states and local jurisdictions across the U.S. are continuing to advance employment-related regulations intended to protect workers. These new and ever-changing laws are a lot for accountants, and their business owner clients, to keep track of, especially if their businesses operate in multiple locations with differing regulatory requirements.
Here are the top five regulatory issues affecting employers at the state and local level that you will want to keep an eye on in the coming months:
#1 The #MeToo Movement
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 those restricting confidentiality and arbitration agreements, expanding protections to non-employees, and strengthening enforcement prevention efforts to include mandatory policies and interactive training. At this time, California, Maine, Connecticut, New York, and Delaware have passed mandatory sexual harassment prevention training requirements and several other states have pending legislation in this area.
#2 Evolving Drug Laws
Though marijuana and marijuana-related products are currently considered 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 and/or related products with or without prescriptions. In states where medicinal, or even recreational, use is permitted, employers are faced with difficulties in navigating workplace drug policy enforcement. For example, employers may still look to terminate or deny employment if the worker using marijuana puts the employer or others in danger, although accommodations under the Americans With Disabilities Act may be warranted in some circumstances.
#3 Paid Leave Laws
Maryland and Michigan passed paid sick leave laws in 2018, bringing the total number of states with paid sick leave laws to 11. Three local jurisdictions also passed paid sick laws this year, including Austin and San Antonio, Texas. Massachusetts was the only state to pass paid family leave legislation in 2018, joining California, Rhode Island, New Jersey, New York, the Washington D.C., and the state of Washington in offering paid family leave to covered employees. With the exception of those in D.C., these family leave benefits are funded through employee payroll deductions.
#4 Health Insurance
As part of the December 2017 tax reform legislation, the federal individual mandate penalty was made zero beginning in January 2019. States are concerned that eliminating the individual mandate penalty will correlate to premium increases and decreased coverage levels in the individual market, so some states, including New Jersey and Vermont, created a state-level individual mandate. Also effective in 2017, Section 1332 State Innovation waivers were provided in the Affordable Care Act (ACA) to promote state innovation by giving states a reprieve from certain ACA provisions. Approved waivers may also allow states access to pass-through funds which would otherwise be spent by the federal government. Eight states already have approved waivers including Alaska, Hawaii, Maryland, Minnesota, New Jersey, Oregon, Wisconsin, and Maine.
#5 State Retirement Plans
Several states and cities have acted to combat the growing retirement savings crisis by establishing state-facilitated savings programs using one of four models: auto-IRA, multiple employer plan (MEP), marketplace, or voluntary payroll deduction IRA. Currently, 11 jurisdictions, including California, Illinois, Massachusetts, New York, and the city of Seattle, have enacted legislation to implement a retirement savings program for private sector workers. An additional 31 states are conducting studies or have proposed legislation to do the same.
Whether at the federal, state, or local level, keeping up with regulations is a challenge for today’s business owners. In today’s fluid environment, demonstrating your up-to-date knowledge and expertise, can help ensure your clients are prepared and reinforce your role as trusted advisor.
Mike Trabold is director of compliance risk for Paychex, Inc. Paychex is a leading provider of human capital management solutions for small- to medium-sized businesses.