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2020 HR Trends and Economic View

2020 HR Trends and Economic View

Its finally here… the United States Department of Labor’s (DOL) new overtime rule is officially in effect.

The DOL reported that this would cause over one million employees to become newly eligible for overtime.  Effective as of January 1st, this year (2020), the new Fair Labor Standards Act (FLSA) ruling increases the salary threshold for exemption by over 50 percent from $23,660 (or $455/week) to $35,568 (or $684/week).  (Forbes; DOL)

There are three options for employers with employees who, prior to January 1, 2020, were classified as exempt and paid below the new threshold.

For an employee to remain exempt, employers will need to increase the employee’s salary to the new minimum.  For employees reclassified as nonexempt, employer’s will need to pay overtime wages for hours exceeding 40 hours/week. Overtime pay is 1.5 times the employee’s hourly rate.   As a third option, employers can also limit the number of overtime hours they allow their nonexempt employees to work.

In addition to the new overtime regulations, the DOL published two opinion letters on January 7th.  These letters are in regard to overtime calculation for non-discretionary lump sum bonuses and payments “per-project.” (DOL; FordHarrison)

Opinion letter FLSA2020-1 discusses calculating the amount of overtime pay appropriate for non-discretionary lump (NLS) bonuses.  This also includes “stay bonuses,” or bonuses used to retain employees.  The DOL states that these NLS bonuses and “stay bonuses” must be included in an employee’s regular rate of pay.  Specific criteria must also be met for an employee to be eligible for an NLS bonus.  An example is provided, by the DOL, in the full letter. Click here to read FLSA2020-1.

The second opinion letter, FLSA2020-2 addresses “per-project” payments and whether they satisfy the salary basis test for exemption. “Per-project” payments would include additional compensation, for a specified time period, that is for additional work beyond a normal (i.e., 40-hour) workweek.  This would directly affect contracted employees, such as consultants.  The DOL provides a thorough example of a “per-project” payment in the full letter.  Click here to read FLSA2020-2.

Despite the new overtime ruling and FLSA regulations, this year, salary budget increases are stable, compared to previous years, with WorldatWork reporting projections at 3.3 percent; an increase of just one-tenth of a percentage over the actual increases in 2019.

The new FLSA regulations are not the only new rulings from the DOL.  This year, we can also expect new rulings limiting joint employment liability for wages and hours. (DOL; Fisher Phillips)

Currently, the ruling is set to come into effect in Mid-March 2020.  The new rule will aid in determining if a business is a “joint employer,” making them equally liable for liability under the federal wage and hour laws.  A four-factor balance test will be employed as the basis for liability.  (DOL)

To read more about this new ruling, please click here.

Regardless of all the new regulations from the DOL, the Bureau of Labor Statistics (BLS) reported that the unemployment rate at the end of 2019’s third quarter was 3.5 percent.  This marks the lowest recorded unemployment rate since Nixon took office in 1969.  The final unemployment rate, for 2019, is expected to be released in March 2020. (BLS)

With unemployment remaining at its lowest in five decades, it is important for human resources to be aware of emerging trends that could affect employees.  Detailed in the list below, are some human resources “trends” and practices to consider for this year.

Trends in HR – 2020

  1. Flexibility – As Gen-Z potentials emerge into the job market as the first fully digital generation, flexible and remote working environments will be increasingly expected and key to retaining talent. (Forbes)

Forbes estimates that Gen-Z will comprise just under 40 percent of the global workforce this year, in 2020.

  1. Inclusivity and Diversity – Key to hiring practices; employers should focus on listening to employees, hiring diversely, and provide accessible, ADA-compliant workplaces. (Forbes)
  1. Technology and Globalization ­– Advancements in these areas are creating a workplace that is virtually 24/7 and tilting the work-life balance, occasionally at the expense of an employee’s physical and emotional health. Online employee development will be an essential way to make certain that employees’ skills remain current.  (Mercer)
  1. “Consumerization” – Increased access to information, in conjunction with growing social media platforms, breeds a consumer mentality amongst employees. Employees may begin to expect customized goals and tasks, along with custom work environments, versus the traditional approach of the same practices and policies for all.  (Mercer)
  1. Generation Gaps – With the emergence of Gen-Z into the workforce, organizations may begin to see a five-generation workplace.  Traditional HR practices may need to be reevaluated to retain Gen-Y (Millennials) and Gen-Z talent, while also accommodating the needs and mentalities of the older generations.  (Mercer)

Moving forward in 2020, a common theme seems to be – more advancements in technology = growing need for flexibility and workplace customization, by employee.

As we continue to navigate the growth of technology and how it changes the workplace and human resources, it is important to remember, no matter what the future holds, “the bottom line always gets down to people.”

Please do not hesitate to contact us with any concerns or questions you may have.

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