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Employment Related Compliance Changes Coming Soon

If there is one thing that business leaders lose sleep over, it’s being blindsided by regulatory changes. While it can be tempting to wait until final details are released, learning about the changes, and strategizing now, can mitigate any negative effects and reduce hasty decision making later. Here are just a few major employment related compliance changes that have already happened or are expected soon:

  1. Illinois Equal Pay Act Certification and Reporting Requirements - PASSED
  2. 401k Changes Imposed by the Secure ACT 2.0 – EXPECTED IN 2022
  3. Salary Threshold Increase to Maintain Exempt Status – EXPECTED IN MAY 2022
  4. Form I-9 Updates – EXPECTED BEFORE OCTOBER 2022

1) Illinois Equal Pay Act Certification and Reporting Requirements
Employers with 100 or more employees in Illinois will need to provide information to the state (similar to but slightly more extensive than federal EEO-1 data) in order to obtain an Equal Pay Registration Certificate. Employers will be notified between March 24, 2022 and March 23, 2024 when it is their ‘turn’ to apply. In addition to the reporting, an officer of the business will need to affirm in a signed statement that the company is in compliance and that the average compensation for female and minority employees is not consistently below the average compensation of similarly situated male employees.
Action Steps To Take Now
Review your compensation practices and determine if they are defendable under the law. Differences due to length of service, experience, skill, effort, responsibility, education, location, and others can be used to explain different compensation levels. Identify and document those factors in employee files so that your decisions can be explained and justified.

2) 401k Changes Imposed by the Secure ACT 2.0
With tremendous bi-partisan support, the rules governing 401k plans are likely to change. A few things are being considered:
  • Mandatory Automatic Enrollment/Escalation
  • Allow for an additional tier of Catch-Up Contributions for older employees
  • Allow Roth Matching Contributions instead of only Pre-Tax
  • Expedite Part-Time Workers’ Participation
  • Authorize Student Loan Matching so that employees making loan payments can still receive a 401k match even if not contributing to the plan
Action Steps To Take Now
Dig out those plan documents and ensure that you are aware of exactly how your plan operates today. When the changes are finalized, you will be better positioned to adapt quickly and to ensure that employees can take advantage of new plan features.

3) Salary Threshold Increase to Maintain Exempt Status
In order to pay an employee a salary, companies must ensure that employees meet the Duties Test (have a certain type of job or level of responsibility) AND meet the Salary Threshold. Currently an employee must be paid a minimum of $684/week if they are considered exempt and are not paid overtime (a few states have higher thresholds). Prior to 2020, the threshold at the federal level was only $455/week. The Department of Labor is expected to announce an increase to this as early as next month. Some predict it could be as high as $913/week which is what the Obama administration tried to push through several years ago. Others believe it could be more.
Action Steps To Take Now
Review the salary levels of your employees so that you know what the potential impact might be. If any employees are making more than $684, but less than $913, they might be impacted by this change. If the employee is being paid less than the new threshold amount, the fix will be to convert those employees to hourly and pay overtime, or increase their salary to the new threshold amount which could wind up being very costly.

4) Form I-9 Updates
The current Form I-9 expires in October of 2022. Proposed changes are likely to simplify the form, however, changes of any sort can sometimes be disruptive. Proposed updates include:
  • Compressing Sections 1 and 2 from two pages down to one page
  • Moving Section 3 to a separate Reverification and Rehire supplement section
  • Updating the list of acceptable documents to include an active link to the USCIS website
  • Reducing and simplifying the forms instructions from 15 pages to 7 pages
Action Steps to Take Now
Review your Form I-9 process. If you are using paper forms, then prepare to retrain employees on how to use the new document. If you use an electronic system to complete Form I-9s, check with your provider to ensure that this is on their radar, and that updates will be made in a timely manner.

We at Connor & Gallagher are always monitoring compliance changes. For questions about the above, or for help with other HR topics, please contact us to discuss how our services can support you and your company. We’re always here to help!
Sandra Teague, SPHR, SHRM-SCP
President, OneSource Division
Connor & Gallagher OneSource (CGO)
Written April 21, 2022

This blog is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.

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