The following post comes from Raleen Gagnon from ManpowerGroup Solutions. Raleen presented “Business Strategy for a New Workforce Ecosystem: Total Talent Management Comes of Age” at the Maine HR Convention in 2018.
The world of work is in a constant cycle of evolution. It sounds cliché, but if your hiring process isn’t always changing, it’s pretty much a given that you are overlooking something that could improve your results. As social and economic dynamics influence candidates and workers, employment laws continue to evolve and change how your competitors are hiring. There are dozens of examples of this in the US alone, but the most significant changes sweeping the nation and creating the need for localized policies are mandated wages, paid sick leave, the salary history bans, and the legalization of marijuana.
While it may still feel as though ‘the norm’ is “time and a half for over 40 hours” and that everyone is talking about increasing the minimum wage to $15 an hour neither perception is entirely accurate. In fact, there are dozens of cities and states who have established individual overtime premiums and requirements that supersede FLSA in those markets. And there is a great deal happening with minimum wage adjustments, but it isn’t just about the adoption of a $15/hour wage because in many cases, that isn’t even on the table right now. There are over 20 markets that have established an escalated wage schedule that has incremental increases going into effect in the coming years, and only a few are ultimately scheduled to reach $15.
With minimum wages and overtime requirements increasingly varied across the US, cost efficiency studies and workforce planning exercise now need to account for these nuances as much as the current wages themselves. Because the laws are changing so quickly, many organizations are inadvertently leaving money on the table in states where regulations are more relaxed or expose themselves to risk in states where regulations are more stringent despite choosing a location with a low to moderate minimum wage.
And make note, this isn’t just about tracking where costs are rising, you need to monitor these things so you can adjust polices when costs go down due to things like the retraction of the minimum wage hike in St. Louis, Missouri. I’m not going to lie; as a general rule, the trend is that minimum wage levels are increasing, so those opportunities to adjust down are rare – but you don’t want to miss them when they arise.
The other way to identify potential cost savings in your location-based strategy is by comparing overtime regulations. Some markets have double time for specific days and shifts which can make them much more expensive, but other locations may not have higher premiums for your shift differentials, overtime may not kick in until well after 40 hours. These minor differences, compounded across your workforce, can have a substantial impact on your bottom line.
Whether an employer leverages remote workers, temporary labor, or makes adjustments to its geographic strategy, tracking these regulations will enable greater cost efficiencies than a simple blanket policy that may leave you at risk of noncompliance or unnecessary expense.
Paid Sick Leave
In the US, we don’t have full benefit parity like so many other countries do, however, we have begun to step in that direction between the national ‘healthcare acts’ and increasing adoption of Paid Sick Leave policies. There aren’t any federal laws that require paid sick leave in private employment, but over the past two years, there have been numerous variations of paid leave for contractors established across the country. Nationally, all federal employees and contractors are currently eligible for paid sick leave, however, in the private sector, paid leave benefits are localized at the city or state level.
This is by no means a standard policy that is being adopted far and wide. The number of paid leave days that a worker can accrue and how long it takes them to accrue those days varies by city or state. In some cases, like California, the accrual details vary by city within the state. If this isn’t something you have been impacted by yet, don’t wait for legislation to be rolled out before determining how you will shift your policies when they do. Paid leave is required to some degree, across the states in Arizona, Connecticut, California, Massachusetts, Oregon, Vermont, and Washington. But things get more complicated when we look deeper at the regulations in California, Illinois, Maryland, Minnesota, New Jersey, New York, Pennsylvania, and Washington, where individual cities have established their own paid leave policies which preempt state law. As it often does, California leads the way with the most challenging breakdowns as it has seven different cities and statewide legislation, each specifying different paid leave requirements and parameters.
Paid sick leave is something that may apply to part-time, temporary, contracted or other types of contingent labor depending on the market and the nuances of the law. As a result of this, employers could be impacted by these costs in a few different ways. Staffing companies may bill you for accrued sick leave as it occurs or on a quarterly basis. Staffing companies may just include the cost of this paid leave in their burdens and increase their bill rates. Staffing companies may not comply with the paid leave regulations, leaving their clients at risk as well. The worst impact comes from being unprepared, and the list of markets that have or are considering adopting paid leave regulations continues to grow each quarter so everyone should be thinking about this, not just those who have to comply today.
Adult-use recreational marijuana. This phrase has a lot of organizations examining their policies at a local, national, and global level. Historically, screening and onboarding procedures have been standardized as much as possible with local adjustments made in countries where certain practices were illegal or frowned upon culturally. But now, with states legalizing it’s medicinal and more recently its recreational use, suddenly these processes and policies need to be examined on a state-by-state basis.
Employers are struggling with how to ensure that their cannabis policy is well-documented as well as being legal. Can you still screen for it during onboarding? Can you let someone go if they fail a drug test on the job? How do you balance their legal rights off the clock with your rights when they are ON the clock? Unfortunately, it isn’t all black and white, and in some cases, we are dealing with a gray area.
There’s a difference between medicinal and recreational use; your industry may influence how you should respond, and which state you operate in will certainly impact your policies as well. The bottom line is that employers need to work closely with their legal counsel to establish the appropriate policies and then be very clear in communicating those policies across their organizations. Some scenarios are already becoming commonplace, with accusations of discrimination coming from candidates who fail a drug test and are eliminated from consideration for a job when they had a ‘legal right’ to use that drug recreationally.
Employers need to evaluate how their use of drug testing may need to vary between candidates vs. employees in these cases. The rights of employers in these states vary depending on the market, but organizations retain the right to control on the job use or use during the course of employment to varying degrees.
It’s important to note, that no state laws currently force employers to tolerate on-the-job use. While a few states like Massachusetts and New York afford protections to registered medicinal marijuana users, most states don’t require employers to make accommodations, even for off-duty marijuana use. As these laws continue to evolve, it’s crucial that employers have a clear understanding of the laws in the areas where they engage workers.
Salary History Ban
Trending this year on the regulatory front are state and city bans on interview questions regarding salary history or previous salary information. Driven primarily by efforts to curb the perpetuation of the wage gap for both minorities and women in the workplace, the banning of salary history related interview questions also bans organizations in certain areas from sharing previous salary information with other organizations.
Many employers are reviewing policies around previous salary information and salary history questions during the interview and onboarding process in certain markets, but as with the above topic of paid leave, this is an area where being prepared with policies before legislation passes in your market may be an advantage.
Changing onboarding procedures one market at a time as these regulations continue to spread nationwide is perhaps less efficient than reviewing your national policy proactively. Some organizations are already considering or implementing a change to their global policy to avoid future disruptions and support pay equalization.
Not having a clear policy on salary history queries puts an organization at risk during the interview process, when the staffing suppliers interview on their behalf, and when responding to queries about former employees. Many markets also require that companies be transparent about compensation bands and wage levels during the interview process, to further level the playing field for candidate compensation. This practice requires employers to evaluate current compensation strategies and ensure that they maintain competitive wage levels to avoid any disadvantage stemming from this ‘transparency.’
The pace at which regulations are changing and becoming more localized in the US seems to be increasing. Many organizations are concerned about compliance risk and maintaining visibility into current and pending regulations across each of their operating markets. This is the only way to ensure that you DO remain on top of these changes. But don’t focus simply on the compliance – there is also opportunity in these local nuances.
Where can your organization drive higher productivity and balance those new remote work strategies? How can you shift overtime schedules to minimize cost and still hit production numbers? Location strategy isn’t just about supply and demand. Furthermore, cost savings isn’t only about wages. Taking the right perspective on how these shifting regulations can create new opportunities for your organization is a great way to establish competitive advantages in hiring. Devising the optimal program location based on availability of skills, cost, potential productivity and regulatory impact to each is like putting together a jigsaw puzzle where the pieces are constantly changing. Take your eye off the pieces and they may no longer fit together the way they used to, making it imperative that you don’t blink!