Posted by Hannah Erdman Posted on
New employment ordinance and regulations coming into effect have companies working hard to prepare for the new Chicago mandatory paid sick leave and national 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
A new Chicago ordinance is requiring businesses, regardless of the number of employees, to provide up to 40 hours of paid sick leave per year to staff starting on July 1, 2017.
The plan covers employees who work at least two hours for a covered employer while physically present within City boundaries in any two-week period and at least 80 hours in any 120-day period. Time spent traveling in the City that is compensated time, including making deliveries, making sales calls, and travel related to other business activity taking place in the City, can count toward the two-hour requirement. Time spent commuting will not be counted.
Covered employers include individuals and companies that maintain a business facility within the geographic boundaries of the City of Chicago or who are subject to one or more of the City’s licensing requirements. The only exemption is for workers subject to a bona fide collective bargaining agreement.
Companies are evaluating their current sick leave policies to ensure they cover the broad array of people and situations for which mandatory sick leave can be used. Companies are also evaluating their time tracking systems to ensure they can track which employees meet or exceed the 80-hour mark each 120 days. Chicago 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 job responsibilities to help manage overtime hours and cost. Employers that do not address these new regulations risk paying steep penalties.
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 regulations 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 Chicago-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 redistribute workload to reduce overtime hours? 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 Chicago, but many of your employees work outside of Chicago in remote locations. Do you currently have a plan rich enough to satisfy the regulations? Will you extend this benefit to only those working in Chicago or across the organization? 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.
Here are questions to ask yourself as you create a plan:
Paid Sick Leave Questions
- Which of your employees work in the city of Chicago?
- 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?
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?
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.