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New employment regulations coming into effect in Minneapolis have companies working hard to prepare for the new mandatory paid sick leave and exemption status requirements. Finance and Human Resources departments are tasked to review their policies, processes and budgets to ensure they are in compliance. Ready or not, change is coming soon—do you have a plan in place?
Here’s a little background on what’s changing:
Paid sick and safe leave law
A new Minneapolis law is requiring all businesses with at least six employees working in Minneapolis to provide paid sick leave to staff starting on July 1, 2017.
The plan covers employees who work at least 80 hours in the city each year, which could include Minneapolis residents who work from home on occasion, Minneapolis-based meetings and employees who travel through the city for work. Workers will earn one hour of sick leave for every 30 hours worked, with a maximum of 48 hours per year. Time could be carried over from year to year, allowing workers to "bank" up to 80 hours of sick leave.
Companies are not only evaluating their sick leave policies, but also their time tracking systems. Minneapolis is not alone in this shift. Cities across the country are passing their own paid sick leave laws, requiring organizations that have employees in a multitude of states to cross reference various sick leave policies to ensure compliance.
The U.S. Department of Labor (DOL) recently finalized the Fair Labor Standards Act’s “white collar” overtime exemptions rules. The new overtime rules go into effect on December 1, 2016, and will increase the salary threshold needed to qualify for overtime exemption from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).
Any business that employs workers with salaries under the new threshold will need to consider their best course of action, which could be paying additional overtime, increasing salaries, or redefining roles. Employers that do not address these new regulations risk paying steep fines and potentially back pay for misclassified employees.
What does this mean for your company?
Companies will be challenged to create innovative solutions that not only comply with the new regulations, but also fit within their company culture. These legislations provide organizations the opportunity to revisit their benefits packages and job expectations to ensure they are aligned with their culture. Instead of one-size-fits-all, find the solution that fits your organization.
Take this scenario for example:
Your Minneapolis-based retail company has 50-75 employees. You are family owned and have always been committed to your employees and providing a supportive, balanced culture. Several of your managers make between $23,660 and $47,476 annually, making them previously exempt. (They are no longer exempt employees under the new rules.)
Moving forward, you may have to assume a larger labor cost—or rethink how the work must now be distributed. Will you increase their salaries to comply with the exemption guidelines, or redefine job descriptions? Do you know how much overtime you would be required to pay if these employees were to become non-exempt? You know there is also a new paid sick leave policy in place in Minneapolis, but many of your employees work outside of Minneapolis in remote locations. Do you currently have a plan rich enough to satisfy the regulations? Do you have systems in place to track all of the required hours? Perhaps most importantly, how will you communicate these changes to your employees?
Compliance is critical, but so is your company culture. It’s important to find a solution that fits your guiding principles, as well as complies with the law.
Questions to ask yourself as you create a plan:
Exempt employees questions
- What’s the financial impact of the wage change to your company?
- How many employees do you have that are salaried exempt making between $23,660 and $47,475?
- Are you going to change their salary, start tracking overtime hours, or redesign the job to redistribute the work?
- How will the changes you make reflect the culture of your workplace?
- How are you going to communicate this to your employees?
Paid sick leave questions
- Which of your employees work in the city of Minneapolis?
- Are you creating a baseline benefit that satisfies everyone?
- Are you going to customize the benefits based on where people live?
- How are you going to manage and track sick and safe time?
- Can your system accommodate this?
Don’t tackle these changes alone. Tap into your network for help or contact Salo to help create an innovative solution that fits your company’s culture.
Salo is a finance, accounting and human resources staffing and consulting firm that drives business outcomes by placing senior-level professionals on a project or interim basis, as well as finance and accounting search services.