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California and New York Set $15 Minimum Wage Precedent

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In 2014 SeaTac, Washington became the first city to enact the nation’s highest minimum wage of $15 per hour. Since then, other cities including Los Angeles have set courses to achieve the $15-per-hour standard. On the state front, however, things remained stagnant until California and New York both hiked their minimum wage to match SeaTac’s.

California’s law at a glance

On April 4th, California Gov. Jerry Brown signed a bill that will increase the state’s minimum wage requirement for employers of 26 or more employees to $15 per hour by Jan. 1, 2022. Employers with 25 or fewer employees will have to comply a year later, by Jan. 1, 2023.

Currently, California’s minimum wage is $10 per hour regardless of the size of a company’s workforce. For employers with 26 or more employees, for the next two years, a 50-cent increase will occur annually with $10.50 and $11.00 being the standard in 2017 and 2018, respectively. Each January 1 thereafter the increase will happen in $1 increments until 2022 when the $15.00 benchmark will be achieved.

For companies employing 25 or fewer employees, the requirement will occur in the same increments but with a one-year delay. The first increase to $10.50 will not occur until January 1, 2018, with $11.00 becoming the standard on January 1, 2019. From there, each January 1 will bring a $1.00 per hour increase until January 1, 2023 when the $15.00 benchmark will be met.

Under the legislation, the governor has the discretion to pause the increases, depending on economic or budgetary conditions.

New York’s law at a glance

Also on April 4th, New York Gov. Andrew Cuomo signed a statewide bill, gradually raising the minimum wage from $9 to $15 over the course of a couple years and endorsing a 12-week paid family leave program. New York’s new minimum wage law sets varying minimum wage standards according to geographical location within the state.

Minimum wage increase:

  • For large businesses in New York City employing 11 or more employees, the minimum wage requirement will increase to $11.00 beginning December 31, 2016, with subsequent $2.00 increases occurring each year until the $15 standard is met on December 31, 2018.
  • For small businesses in New York City employing 10 or fewer employees, the minimum wage will rise to $10.50 on December 31, 2016, with subsequent $1.50 increases annually until the $15.00 level is achieved on December 31, 2019.
  • For businesses located in Nassau, Suffolk and Westchester counties, the minimum wage requirement will increase to $10 on December 31, 2016 with annual $1 increases until the $15 level is achieved on December 31, 2021.
  • For businesses in other areas of the state, the minimum wage requirement will be set at $9.70 on December 31, 2016, and $0.70 annual increases will occur until a level of $12.50 is reached on December 31, 2020. After 2020 the minimum wage will be increased to a level of $15 per hour according to a schedule set at that time by the Division of Budget and the state Department of Labor.

12-week paid family leave

Once fully enacted, New York’s 12-week paid family leave policy will be the most comprehensive program on a state level in the nation. Essentially, employees will qualify for 12 weeks of paid family leave when:

    • caring for an infant,
    • looking after a family member who has a serious health condition, or
    • taking care of family matters because someone was called to active military service.

The benefit schedule will occur incrementally, with employees becoming eligible for up to eight weeks of benefits of 50% of the employee’s average weekly wage in 2018. Benefits will increase according to a set schedule to a level of 12 weeks of paid family leave at 67% of their average weekly wage in 2021.

To pay for this, New York will begin withholding a tax from employee wages to fund this increase on January 1, 2018, so there will be no cost to the employer.

Response from other states

With major states on both coasts now setting the state minimum wage bar at $15 per hour, the obvious question is: Will other states follow?

The gradual increase toward $15 thus far has eluded other states, but this week’s news creates a tremendous momentum for other states to follow. It bears noting that some states have increased their minimum wage, although not on a scale quite as aggressive.

What the increase means for employers

Employers in states or cities with minimum wage surges must pay employees according to the new laws. Increases happening on a gradual basis will need special attention, so remain diligent in keeping aware of these ever-changing requirements.



Author Bio: Barclay has over 20 years of experience working as a consultant. He has worked in the consulting practices of accounting firms Ernst & Young and Causey Demgen & Moore. Barclay joined Paycom in 2011 and is currently a Tax Research Analyst. Robbie is a graduate of Rhodes College in Memphis, Tenn.

Open positions

Why Its So Difficult to Fill Your Open Positions

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If you feel like it’s getting more and more challenging to find qualified employees to fill your positions, you’re right. New evidence from the Deutsche Bank indicates that the length of time a vacancy lays open has increased overall since 2010. Open positions are increasingly difficult to fill due to several trends within the current labor market. However, there are several actions you can take as a business leader to improve your ability to hire and retain a quality workforce.

Finding and keeping the top-talent your business needs is about to get tougher.

Open Positions Are Staying Vacant Longer

Currently, according to economist Torsten Sløk with the Deutsche Bank, positions are open on average 31 days before being filled. That’s significantly higher than the 24-day average in prerecession 2007, which was the longest span positions stayed vacant since 2001. Job vacancies were filled in about 15 days in 2009, and the length of time it has taken to fill open positions has increased steadily in the eight years since.

Many Business Struggle to Find and Keep Qualified Workers

What does this mean for business leaders? That finding the right worker has become increasingly challenging. The Federal Reserve’s recently released Beige Book notes tightening in labor markets nationwide.

In Pennsylvania, for example, “staffing contacts reported spending more time and money on recruiting labor and refilling positions after the initial hire quit, sometimes after just a few days.”

Additionally, the Federal Reserve’s contacts across the nation and in a variety of industries reported that hiring was limited because there were not enough qualified workers available.

Labor Trends Influencing This Challenge

Some of the reasons cited by the Beige Book included job hopping and a disconnect between companies and job candidates on compensation. Federal Reserve contacts noted “rising wage pressures” in both high- and low-skilled positions. Some also mentioned that the costs of benefits and variable pay were increasing.

Another possible reason employers struggle to find the right people to fill their positions is a growing gap between the skills needed in the workplace and the skills that are available among the workforce. In fact, according to SHRM, we are currently facing “the most acute talent shortage since the Great Recession.”

What It Means For You

It’s now more important than ever to retain your star employees, and attract candidates like them. Having competitive compensation and a culture that appeals to the job seeker can give you an edge in this job market. Consider implementing more in-depth, on-the-job training to address the skills gap, and ensure that you have efficient hiring processes in place to eliminate any wasted time, money and energy.

If you’d like to learn more about current labor trends and what they mean for your business, you can find a wealth of information in our on-demand webinar on current labor trends.

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Posted in Blog, Featured, Talent Acquisition

Jeff York

by Jeff York


Author Bio: Jeff York, Paycom’s chief sales officer, has more than three decades of sales experience and has held a variety of sales management positions; prior to joining Paycom In 2007, York spent 12 years with a legacy payroll provider, where he held a variety of sales management positions including vice president of sales for the major accounts division. York, a Texas Tech University graduate, also holds an MBA from Baylor University’s Hankamer School of Business.

IRS Continues to Enforce Affordable Care Act

IRS Continues to Enforce Affordable Care Act

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The IRS recently released an information letter indicating that the IRS continues to enforce the Affordable Care Act (ACA).

Dated June 30, Letter 2017-0010 was sent to a member of Congress who reached out to the IRS at the request of a constituent, a tax-exempt entity concerned it may owe an employer shared responsibility payment (ESRP) because it did not comply with the ACA rules on offering health insurance to its employees, for both financial and religious reasons.

The letter first provides a brief summary of the circumstances that might lead to a large employer owing an ESRP, and notes that there is no provision in the ACA that provides for the waiver of an ESRP.

The letter then addresses the effect of the president’s Jan. 20 executive order on the enforcement of the ACA. Titled “Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal,” the order directed federal agencies to exercise discretion permitted to them by law to reduce potential burdens imposed by the ACA.

However, it did not change the health care law. The legislative provisions of the ACA are still in force until changed by Congress; therefore, taxpayers remain required to follow the law and pay what they may owe.

For more information on the executive order and the current tax filing season, visit https://www.irs.gov/tax-professionals/aca-information-center-for-tax-professionals.

What This Means for Employers

Since Congress has not yet passed a bill that would repeal the ACA, and Republicans have struggled to draft a bill that would receive majority support, employers should use caution and plan to comply with the law’s requirements unless and until the ACA is repealed and any new law’s provisions actually go into effect. Continued compliance may be required for a transition period, following passage of an ACA repeal bill, depending on the language of that legislation.

 

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Posted in ACA, Blog, Featured

Erin Maxwell

by Erin Maxwell


Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

Missouri minimum wage

Missouri Minimum Wage to Decrease from $10 to $7.70

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An overwhelming trend in the U.S. is cities and states increasing the minimum wage employers must pay their employees. However, St. Louis, Missouri is bucking this trend – although not willingly – by decreasing its minimum wage from $10 to $7.70, effective Aug. 28.

Court Battle

In 2015, St. Louis passed an ordinance raising its minimum wage to $10, with an automatic increase to $11 scheduled for January 2018. This prompted the Missouri legislature to pass legislation to pre-empt the ordinance from taking effect. The legislation was quickly enjoined in a lawsuit that went all the way to the Missouri Supreme Court.

In May of this year, St. Louis prevailed in the lawsuit and the minimum wage increased to $10. However, three months after the $10 minimum wage was implemented, the Missouri legislature passed another law disallowing any city in the state from having a higher minimum wage than the state, which is currently $7.70, this forcing St. Louis to reverse.

States vs. Cities

State governments dictating cities’ minimum wages is not altogether uncommon. In 2016, Alabama’s legislature shut down the Birmingham City Council’s efforts to raise its minimum wage. Similar efforts were undertaken by Ohio to block the City of Cleveland.

Other states have preemptively prohibited localities from passing minimum-wage ordinances – even before cities have commenced such efforts. Some of these states include:

  • Colorado
  • Idaho
  • Indiana
  • Kansas
  • Kentucky
  • Michigan
  • North Carolina
  • Oklahoma
  • South Carolina
  • Tennessee
  • Texas
  • Wisconsin

 

Although the St. Louis minimum wage decrease runs counter to the national trend, state legislatures prohibiting local increases is not uncommon. As more cities begin to adopt higher minimum wages, expect some state legislatures to push back.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

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Posted in Blog, Featured, Payroll

Jason Hines

by Jason Hines


Author Bio: Jason Hines is a Paycom compliance attorney. With more than five years’ experience in the legal field, he monitors developments in human resource laws, rules and regulations to ensure any changes are promptly updated in Paycom’s system for our clients. Previously, he was an attorney at the Oklahoma City law firm Elias, Books, Brown & Nelson. Hines earned a bachelor’s degree from the University of Central Oklahoma and his juris doctor degree from the Oklahoma City University School of Law, where he graduated cum laude. A fan of the Oklahoma City Thunder, Hines also enjoys exploring the great outdoors with his wife and daughter.

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