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2016 – A Look Back at the Past with an Eye on the Future

“Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained, as among savages, infancy is perpetual. Those who cannot remember the past are condemned to repeat it.”

-George Santayana, Philosopher, Essayist, Poet, HR Guru (not really)

The On-Again Off-Again Overtime Rule Saga

On May 23, 2016 the Department of Labor (DOL) revised the Overtime Rule to increase the minimum salary used in the salary basis test when evaluating whether an employee is exempt or non-exempt. The final rule effectively doubles the minimum salary that must be paid to exempt employees from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). Regardless of their opinion (and almost everyone had an opinion regarding the final rule) almost every employer would be impacted, and the rule was set to take effect December 1, 2016.

Twenty-one states filed a lawsuit against the DOL, the Wage and Hour Division (WHD) and their agents, challenging the implementation of the new rule. In October 2016, these states stepped up the pressure and sought a preliminary injunction to block the implementation of the increased minimum salary. On November 22, the U.S. District Court for the Eastern District of Texas issued the requested injunction which stopped the implementation of the new rule nationwide. The DOL filed a notice of appeal on December 1, 2016.

Employers are thus left with a cloudy outlook on what’s next. It is difficult to forecast whether the appellate court will rule that the injunction was properly issued. Furthermore, it is uncertain whether the new DOL leaders appointed by President Donald Trump will pursue the appeal or whether they will scrap the new rule altogether. As things stand, employers are not required to comply with the new rule but should keep one ear to the ground as the new President takes office. Keep in mind that the DOL estimates that over 70 percent of employers are in violation of the existing overtime rules and that even if the new rule does not go into effect, it would be wise for employers to review their employee classifications.

Minimum Wage Woes

2020 will be the first time in history that any state will have a minimum wage that is double the federal minimum. Over the last couple of years, the U.S. has seen a dramatic rise in state minimum wages. Moreover, nineteen states (including Ohio, New York and California) will start 2017 with an increase in their state minimum wages; additional increases are coming in late 2017 for Oregon, Washington D.C., and Maryland. Employers worry that these hikes may drive jobs out of their states, but Washington D.C. and California have already approved future increases until the minimum wage reaches $15 per hour.

Ohio Cities won’t be Joining the Party

Although Ohio raised the state minimum wage to $8.15 per hour starting in 2017, Governor John Kasich signed legislation on December 19, 2016 that prevents political subdivisions from establishing minimum wage rates different from the rate required by state law. The bill further granted private employers exclusive authority to establish policies concerning hours and location of work, among others, unless an exception applies.

E-Verify Extended Through April 2017

On December 10, 2016, President Barack Obama signed a law that temporarily extends the federal Electronic Verification system (E-Verify) program through April 28, 2017. E-Verify is a web-based program that allows participating employers to electronically verify the information provided by employees on Form I-9.

Revisions to Form I-9 Take Effect

Speaking of Form I-9, USCIS released a revised version of Form I-9, Employment Eligibility Verification on November 14, 2016. Employers are required to start using the revised form as of January 22, 2017. Existing storage and retention rules still apply, and previously complete forms should be maintained as stated in those rules. The new form is available at the USCIS website: https://www.uscis.gov/i-9.

Republicans Look to Repeal the Affordable Care Act

While GOP lawmakers are looking to appease their base with headlines of “Obamacare Repeal”, some Republicans are cautioning against repealing the law immediately. Concerns include the elimination of up to 3 million jobs in the health care sector, a potential reduction in gross state product of $1.5 trillion (from 2019 through 2023 according to a study), leaving people without health insurance and general chaos in an already sketchy healthcare market.

Many Republicans are noting the risks and stressing that the party must make strides on a replacement plan before repealing the Affordable Care Act. Without a bridge to a new plan, the entire system will be left in shambles. As it stands now, Republican party leaders are favoring a repeal bill that includes a two/three year transition period, a strategy being called “repeal and delay.”

One provision, almost guaranteed to be among the first to go would be the requirement that companies with at least 50 full-time employees provide health care coverage. However, experts don’t expect a huge number of employers to suddenly drop their health care benefits. Even if employers choose to discontinue benefits, they would have to consider the negative perception employees would have of such actions and that the wages of their employees would be effectively reduced as employees would need to pay out of pocket for new insurance plans.

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