Navigating the Modern ‘9 to 5’ Workplace: Compliance Strategies for Business Longevity
When Dolly Parton penned her iconic song “9 to 5” in 1980, she likely didn’t envision the complex maze of modern employment regulations that employers navigate daily. Today, businesses must remain vigilant to comply with a vast array of evolving rules. Worker classifications, remote work policies, and wage and hour regulations are just a few critical areas requiring careful attention. Noncompliance can result in costly penalties that jeopardize a business’s success and longevity.
WORKER CLASSIFICATIONS
Proper worker classification is critical to avoid legal and financial pitfalls. A central issue is distinguishing between employees and independent contractors. Under the Fair Labor Standards Act (FLSA), employees are entitled to minimum wage and overtime pay, whereas independent contractors are not. Similarly, Pennsylvania’s Minimum Wage Act (MWA) requires overtime pay to employees but excludes independent contractors. Misclassifying workers can expose employers to administrative enforcement actions for unpaid wages, liquidated damages and attorneys’ fees.
To address this issue, the Department of Labor’s Wage and Hour Division issued a final rule effective March 11, 2024, offering updated guidance on worker classification. The guidance emphasizes using a totality of the circumstances approach. A worker is more likely an employee if the employer controls the manner and means of their work. Conversely, independent contractors typically control their schedules, supply their own tools, and decide how to complete their tasks.
No single factor is decisive, but using the Department of Labor’s framework can help employers avoid costly errors. Businesses should carefully evaluate their practices and documentation to ensure accurate worker classification, reducing the risk of penalties and lawsuits.
REMOTE WORK POLICIES
As remote work becomes increasingly common, employers must ensure their policies meet applicable regulations. Remote employees remain subject to laws like the FLSA, the Americans with Disabilities Act (ADA), and the Family and Medical Leave Act (FMLA). Employers must ensure compliance across these areas to avoid legal exposure.
protocols for responding to cyberattacks. Proactively training employees on cybersecurity best practices can help mitigate risks.
By regularly updating remote work policies to align with regulations and providing employees with the necessary training and tools, businesses can foster compliance while protecting their operations from potential threats.
WAGE AND HOUR REGULATIONS
Recent changes to wage and hour regulations, including updates to the executive, administrative, and professional (EAP) exemption under the FLSA, require employers’ attention. The EAP exemption excludes certain employees from minimum wage and overtime protections if they meet specific criteria: 1) being paid a fixed salary, 2) earning at least the required weekly salary, and 3) primarily performing executive, administrative or professional duties.
As of July 1, 2024, the Department of Labor raised the standard salary threshold for EAP-exempt employees from $684 to $844 per week. The total annual compensation requirement for highly compensated employees also increased from $107,432 to $132,964. These thresholds will adjust again on January 1, 2025, to $1,128 per week and $151,164 annually, respectively. However, a ruling on November 15 by the District Court for the Eastern District of Texas invalidated this increase, pending appeal to the Fifth Circuit. Employers should review their payroll practices to ensure compliance given the Court’s order. Missteps could lead to costly litigation, particularly if employees are inadvertently classified as exempt but do not meet the updated requirements.
PROMOTING LONGEVITY THROUGH COMPLIANCE
The dynamic nature of employment law requires constant vigilance. Whether it’s worker classification, remote work policies, or wage and hour regulations, staying ahead of legal changes is essential. Employers who invest in compliance not only avoid legal penalties but also position their businesses for long-term success.
By implementing timely updates to policies and training programs, businesses can protect themselves from liability while fostering a productive and engaged workforce. Proactive compliance will remain a cornerstone of sustainable business practices as the regulatory landscape evolves.
For more information, please contact an attorney in the Labor & Employment Practice Group at MacDonald Illig at 814/870-7600 or email info@mijb.com.
Article featured in the Manufacturer and Business Association's January 2025 Business Magazine
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