Category: Compliance Corner

On Feb. 21, 2025, Michigan Gov. Gretchen Whitmer signed a significant amendment to the Earned Sick Time Act (ESTA), introducing several employer-friendly changes just as the law was set to take effect. This 11th-hour modification comes after a long legal battle that saw the Michigan Supreme Court rule the previous adopt-and-amend approach unconstitutional in July 2024.

Key changes to the ESTA:

1. Implementation timeline: 
   • The law is effective immediately for most employers. 
   • Small businesses with 10 or fewer employees have until Oct. 1, 2025, to comply. 
2. Coverage and exemptions: 
   • All employers are now covered, and there are different provisions for those with 10 or fewer employees. 
   • New businesses are exempt for the first three years of operation. 
   • Certain employee categories are now excluded, including those who set their own hours, unpaid interns and youth employees. 
3. Accrual and usage: 
   • Employees accrue one hour of paid sick time for every 30 hours worked. 
   • Employers can opt to front-load sick time at the beginning of the year. 
   • Usage caps are set at 72 hours per year for larger employers and 40 hours for small businesses. 
4. Carryover and documentation: 
   • No carryover is required if employers front-load time. 
   • Employers using accrual methods must allow carryover of up to 72 hours (40 for small businesses). 
   • Employees must provide documentation within 15 days if requested for absences exceeding three consecutive days. 
5. Legal recourse: 
   • The amendment removes the private right of action, allowing only administrative complaints for recourse. 

Employers should review their current policies and make necessary adjustments to ensure compliance with the amended ESTA. It’s advisable to consult with legal counsel to navigate these changes effectively.  As Michigan adjusts to the new sick leave requirements, it is essential for businesses to stay informed and ready to implement these updated regulations. The ESTA signifies a substantial change in employee benefits, seeking to offer more extensive sick leave coverage while addressing employer considerations. 

Effective May 1, 2025, Missouri’s new Earned Paid Sick Time law will take effect. Here are the key details employers need to know:

1. Coverage 
   • Applies to all private employers in Missouri 
   • Excludes federal and state government entities 
   • Some employee categories are exempt (e.g., certain nonprofit workers and employees in retail/service businesses with annual gross sales below $500,000) 
2. Accrual and usage 
   • Employees earn one hour of paid sick leave for every 30 hours worked 
   • Accrual begins May 1, 2025, or upon hire (whichever is later) 
   • There is no waiting period, so employees can use sick time as it accrues 
3. Annual limits 
   • Employers with 15+ employees: 56 hours of use per year 
   • Employers with fewer than 15 employees: 40 hours of use per year 
4. Carryover and front-loading 
   • Up to 80 hours of unused sick leave can carry over to the next year 
   • Employers may front-load sick leave at the beginning of the year 
   • If front-loading, unused time must be paid out at year-end 
5. Permitted uses 
   • An employee’s or their family member’s physical/mental health care 
   • Absences due to domestic violence, sexual assault or stalking 
   • Closures of workplace or schools due to public health emergencies 
6. Employer requirements 
   • Display a workplace poster by April 15, 2025 
   • Provide individual notice to employees within 14 days of hire 
   • Maintain records for at least three years 
7. Next steps 
   • Review and update your existing PTO policies 
   • Prepare for implementation by May 1, 2025 
   • Watch for potential legal challenges or legislative changes 

In a significant move to streamline Affordable Care Act reporting, former President Joe Biden signed two crucial pieces of legislation on Dec. 23, 2024: the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act. These laws introduce welcome changes that will ease the administrative load on employers starting with the 2024 reporting year. 

Summary of key changes: 

1. Forms 1095-B and 1095-C are now available by request 
   • Employers are no longer required to automatically distribute these forms to all employees.  
   • Employers must provide a clear, conspicuous and accessible notice to inform employees of their right to request the forms. 
   • When requested, employers must furnish the forms by Jan. 31 of the following year or within 30 days of the request, whichever is later. 
2. Enhanced electronic delivery options 
   • Employers can now more broadly distribute Forms 1095-B and 1095-C electronically. 
   • Employees who have previously consented to electronic delivery are considered to have ongoing consent unless they explicitly revoke it. 
3. Extended response time for IRS penalty assessments 
   • The deadline for employers to respond to proposed ACA penalty assessments (Letter 226-J) has been extended from 30 to 90 days. 
4. New statute of limitations 
   • A six-year statute of limitations has been established for collecting ACA-related assessments. 
5. Flexibility in reporting 
   • Employers can now substitute an employee’s date of birth for their tax identification number when the TIN is unavailable. 

What this means for employers: 

These changes significantly reduce the paperwork burden and offer more flexibility in ACA reporting. However, it’s crucial to note that employers must still prepare and file Forms 1095-C and 1095-B with the IRS by the usual deadlines. 

Next steps: 

• Update your ACA reporting processes to align with these new requirements. 
• Prepare to provide clear notices to employees about form availability. 
• Review and update electronic delivery consent procedures. 

Remember: State-specific reporting requirements may still apply. Employers should consult with their legal and tax advisors to ensure full compliance with both federal and state regulations. 

Stay tuned for further guidance from the IRS on implementing these new provisions. As we navigate these changes together, the simplification of ACA reporting promises to bring welcome relief. 

This information is provided solely for informational purposes and does not constitute legal advice or create an attorney-client relationship. Its content is general in nature and may not address individual circumstances or specific legal issues. Insperity does not interpret clients’ retirement plan documents and does not administer, have discretionary or act as a fiduciary of any client-sponsored retirement plans. For legal advice tailored to your situation, please consult with your legal counsel.

Effective Nov. 21, 2024, Massachusetts will implement new provisions regarding sick leave related to pregnancy loss. Here are the key details:  

1. Eligibility: Employees who experience pregnancy loss will be entitled to use their accrued sick leave under the Massachusetts Earned Sick Time law. This applies to all employees, including part-time and temporary workers.
2. Sick leave accrual: Employees can earn up to 40 hours of paid sick time per calendar year, accruing one hour for every 30 hours worked. Employers with 11 or more employees must provide paid sick time, while those with fewer than 11 are required to provide sick time but it does not have to be paid.
3. Notification requirements: Employees must notify their employers of the need to use sick time, typically requiring advance notice unless in emergencies.
4. Documentation: While employers can request documentation for absences longer than three consecutive days, they cannot ask for details regarding the specific medical condition or situation related to the use of sick leave.

This new provision reflects Massachusetts’s commitment to supporting employees during difficult times and ensuring they have access to necessary leave for recovery from pregnancy loss. Employers should review and update their sick-leave policies accordingly to comply with these changes.

This information is provided solely for informational purposes and does not constitute legal advice or create an attorney-client relationship. Its content is general in nature and may not address individual circumstances or specific legal issues. Insperity does not interpret clients’ retirement plan documents and does not administer, have discretionary or act as a fiduciary of any client-sponsored retirement plans. For legal advice tailored to your situation, please consult with your legal counsel.

In many states, legislation mandates that employers must grant their employees time off to participate in elections. In these locations, employers cannot punish workers for taking voting leave, although some states may require prior notification for the leave to be protected. State regulations differ regarding the length of the time off, the specific requirements that must be fulfilled, whether the leave must be compensated and the notice employees are obligated to provide. Read Time off to vote: How does your state rank? in the Insperity® Help Center for details and voting requirements by state. 

In Minnesota, the first Wage Detail Reports under the new Paid Family and Medical Leave law are due on Oct. 31, 2024. Here are the key details regarding this requirement:

1. Reporting period: The Wage Detail Reports will cover wages paid between July 1, 2024 and Sept. 30, 2024.
2. Who must report: All employers with at least one employee in Minnesota (excluding independent contractors) are required to submit these reports.
3. Submission method: Employers will use the Minnesota Department of Employment and Economic Development (DEED) Unemployment Insurance Portal for reporting. Those already submitting unemployment insurance reports can use their existing accounts, while employers not covered by unemployment insurance must create a Paid Leave Only account. 
4. Content of reports: The reports must include employee details such as:

• First and last name
• Social Security number
• Wages paid
• Hours worked

• Penalties for noncompliance: Employers who fail to submit the Wage Detail Reports on time may face fee-based penalties.
• Context of the law: Although employees cannot take leave under this law until 2026, these reports are a preparatory step for implementing the Paid Family and Medical Leave program.

Employers should ensure they are prepared to submit these reports by the deadline and monitor communications from DEED for further guidance on the process.

How can Workforce Acceleration help?

For employers subject to Minnesota State Unemployment Insurance (SUI), the agency will utilize the quarterly wage data submitted through unemployment tax filings for paid leave reporting. Employers currently exempt from Minnesota SUI must register for a Family Leave Only account and report wages using the information associated with that account. Please note that the system does not accumulate wages when a tax is marked as exempt. To ensure that Minnesota SUI exempt employers can accumulate wages and generate the SUI quarterly return required for reporting purposes, the following updates must be made:

1. Tax status update: On the tax maintenance screen, Minnesota SUI exempt employers should change the tax status of the MN-MINNESOTA SUI Employer Tax to Active with a rate of zero percent. The MN-MN WORKFORCE ENHANCE FEE ER should remain marked as Exempt. This adjustment allows wages to accumulate without calculating any tax.
2. EIN requirements: The Employer Identification Number (EIN) entered for the MN SUI Employer Tax should be the paid leave only account number assigned to the employer.
3. Wage/tax adjustments: For Q3 2024, wage and tax adjustments must be processed to ensure accurate reporting on the quarterly return.
4. Future reporting: Moving forward, wages will be automatically calculated and reported on the quarterly SUI return under the paid leave only account.
5. Manual reporting for exempt employees: For companies that are subject to SUI but have individual employees who are SUI exempt, those employees will need to be reported manually at this time.

Currently, Vertex has not provided guidance on how Minnesota paid leave will be managed once the tax is officially implemented. Please adhere to the above practices for Minnesota paid leave reporting until further details are released. If you have any questions regarding reporting requirements or need more information about Minnesota paid leave, please contact the agency directly.

More information can be found on the Minnesota’s Paid Leave employer website

This information is provided solely for informational purposes and does not constitute legal advice or create an attorney-client relationship. Its content is general in nature and may not address individual circumstances or specific legal issues. Insperity does not interpret clients’ retirement plan documents and does not administer, have discretionary, or act as a fiduciary of any client-sponsored retirement plans. For legal advice tailored to your situation, please consult with your legal counsel.

TThe Fair Chance Initiative for Hiring Ordinance (FCIHO), commonly called the LA Fair Chance Ordinance, is a Los Angeles regulation designed to provide individuals who have criminal histories with an equitable opportunity for employment.  The following are some important aspects of the ordinance:

• Private Employers: It requires private employers to refrain from asking about a job applicant’s criminal history on job applications and postings until after a conditional offer of employment has been made.
• Conditional Offers: If an offer of employment is withdrawn due to criminal history, the applicant must be given the opportunity for the Fair Chance Process.

• State Compliance: Businesses with employees working within the geographic boundaries of the City of Los Angeles must comply with both the LA Fair Chance Ordinance and the California Fair Chance Act.
• County Extension: Recently, the Los Angeles County Board of Supervisors introduced a motion to adopt the Fair Chance Ordinance for Employers, which will provide additional rights, protections, and enforcement mechanisms for persons with criminal history seeking

employment in the unincorporated areas of Los Angeles County.

This ordinance is part of the broader “Ban the Box” movement, which seeks to remove the checkbox that asks if applicants have a criminal record from job applications.  It’s designed to ensure that all candidates have an equal opportunity to be employed, thus promoting an inclusive workforce and economy.

For more information, click here.

The information provided here is intended for informational purposes only and should not be construed as legal advice.  We strongly recommend consulting with a qualified legal professional for any legal advice pertaining to your company.

Chicago Paid Leave and Sick Leave

Under the Chicago Paid Leave ordinance, all employers in the city are required to offer both paid leave and paid sick leave to their workers.  The following are important details:

1. Eligibility: Employees who have worked a minimum of 80 hours for an employer within any 120-
   day timeframe in Chicago are entitled to benefits under this ordinance.
2. Accrual: For every 35 hours worked, employees earn one hour of paid leave, capping at 40 hours over a 12-month period.
3. Usage: Employees may use up to five days each of paid leave and paid sick leave annually.

Notice: Employers are required to prominently display a notice at all workplaces and incorporate it with the first paycheck issued to qualified employees.

This ordinance is designed to ensure employees have the ability to take leave for personal or medical needs, promoting a workplace that supports health and balance.

For more information: City of Chicago :: Paid Leave and Paid Sick Leave.

Illinois Captive Audience Law

The Illinois Captive Audience Law, officially known as the Worker Freedom of Speech Act, was signed into law by Governor JB Pritzker on Jul. 31, 2024.  This law prohibits employers from taking adverse actions against employees who refuse to attend employer-sponsored meetings or receive communications concerning the employer’s views on religious or political matters, including unionization.  The law aims to protect employees from being coerced into listening to their employer’s opinions on these topics and will take effect on Jan. 1, 2025.

Other states with similar captive audience laws include:

• Connecticut
• Maine
• Minnesota
• New York
• Oregon
• Washington

These laws generally prevent employers from disciplining or threatening employees who choose not to attend meetings where the employer discusses religious or political matters.  Some states also require employers to post notices informing employees of their rights under these laws.

Click here for more information.

The information provided here is intended for informational purposes only and should not be construed as legal advice.  We strongly recommend consulting with a qualified legal professional for any legal advice pertaining to your company.

The non-compete rule refers to regulations that restrict or prohibit non-compete agreements, which are contracts preventing employees from working for competitors or starting a competing business for a certain period after leaving a job.

Latest Developments:  

• FTC’s Final Rule: On May 7, 2024, the Federal Trade Commission (FTC) published a final rule banning almost all non-compete agreements between employers and workers.  This rule aims to promote competition, increase worker wages, and foster innovation. 
• Court Challenges:  On July 3, 2024, a district court in Texas issued a preliminary injunction against the FTC’s rule, delaying its enforcement for certain plaintiffs. The court ruled that the FTC lacked the authority to issue such a sweeping ban and found the rule to be arbitrary and capricious. 
• Recent Rulings: On July 24, 2024, a federal judge in Pennsylvania upheld the FTC’s ban on non-compete agreements.  This ruling supports the FTC’s authority to enforce the ban, which aims to promote competition and protect workers’ rights. 
• Upcoming Legal Challenges: The legitimacy of the FTC’s regulation is expected to be resolved by superior judicial authorities, such as the U.S. Court of Appeals in the Third and Fifth Circuits.  The decisions in these legal battles will shape the enforceability of the rule across the country. 

Key Points: 

• The last rule from the FTC, banning most non-compete agreements regarding “workers,” pertains to any employment terms that deter, penalize, or prohibit a worker from pursuing work or establishing a business across the U.S. 
• The regulation makes allowances for existing agreements with senior executives, non-compete provisions associated with the sale of a business, and legal issues that began before the regulation takes effect on Sept. 4, 2024. 
• The rule requires that employers must issue notices to their employees who are under non-compete clauses, letting them know that these provisions are no longer enforceable. 
• Two lawsuits are contesting the rule, requesting a temporary hold on its start date.  Both cases are moving quickly through the courts, and their outcomes could significantly impact the implementation of the FTC’s non-compete rule. 
• If a stay is not issued by Aug. 1, 2024, employers should begin preparing for the FTC’s non-compete rule to take effect on Sept. 4, 2024.  This means that unless the court issues a stay, the rule will proceed as planned, and employers will need to comply with the new regulations. 

For additional details, please follow this link.  https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes  

This information is intended for informational purposes only and does not constitute legal advice.  The information contained herein is not a substitute for professional legal counsel.  For specific legal advice tailored to your situation, please consult your legal counsel. 

In a significant move aimed at safeguarding indoor workers, the California Division of Occupational Safety and Health (Cal/OSHA) has approved a long-awaited indoor heat illness standard, slated to go into effect Aug. 1, 2024.  This standard, designated as Section 3396, mandates crucial protections for workers in indoor environments where temperatures reach 87 degrees Fahrenheit or higher. 

Understanding the New Standard 

The Section 3396 standard requires employers to take proactive measures when indoor temperatures reach specific thresholds: 

• Temperature Thresholds: Employers must reduce room temperatures and provide cool-down options when indoor temperatures are at 87 degrees Fahrenheit or above. 
• Special Conditions: For workers wearing poorly ventilating protective clothing or those near heat sources, measures must be in place when temperatures hit 82 degrees Fahrenheit. 

Employer Responsibilities 

To comply with the new standard, California employers will need to implement several key measures: 

• Cool-Down Options: This includes providing access to cooler workspaces, air conditioning or fans, designated cool-off zones, and free access to cold water. 
• Heat Illness Monitoring: Supervisors are required to monitor conditions closely during heat waves, especially for new employees who are acclimatizing to the environment. 
• Emergency Response: Employers must establish procedures for responding to heat-related emergencies promptly, ensuring access to medical attention if needed. 

Training Requirements 

Both employees and supervisors must undergo training on heat illness prevention: 

• Employee Training: Covers risk factors, recognition of heat illness symptoms, procedures for accessing cool-down areas, and the importance of hydration. 
• Supervisor Training: Includes additional responsibilities such as implementing heat illness prevention procedures, monitoring weather conditions, and responding to potential heat-related emergencies. 

Exceptions and Rationale 

The standard does not apply to workplaces that do not reach the specified temperature thresholds indoors or to remote workplaces beyond employer control.  The initiative stems from California’s existing outdoor heat illness prevention standard, introduced in 2006, which previously did not extend protections to indoor workers. 

Why It Matters 

California’s move comes amid increasing concerns over worker safety in warmer climates, particularly after record-breaking temperatures in recent years.  Heat-related illnesses such as heat stroke and heat exhaustion pose severe risks to workers, with approximately 1,000 workers in California filing compensation claims annually due to heat exposure. 

Conclusion 

As California continues to lead in workplace safety regulations, the new indoor heat illness standard marks a critical step toward ensuring the well-being of indoor workers across various industries.  By implementing these measures, employers not only enhance workplace safety but also mitigate risks associated with heat-related illnesses, ultimately fostering a healthier and more productive workforce. 

For additional details, please follow these links: 

Comparison Chart of Indoor and Outdoor Heat Illness Prevention Standards 

dir.ca.gov 

The information provided here is intended for informational purposes only and should not be construed as legal advice.  We strongly recommend consulting with a qualified legal professional for any legal advice pertaining to your company.