People in a crosswalk from above

The future of HR and payroll: staying compliant and mitigating risk

Over the last few years, the conversation around how we work has been dominated by headlines around remote or hybrid work arrangements. While these arrangements are not new, employers have recognized the complexities of multistate employment and the need to prioritize regulatory compliance.

The complexity of HR and payroll compliance is that it’s not just federal, state or local regulations that an employer has to follow – it’s often a combination of these regulations. Employers need to understand how they work together and how to apply them within their organization in order to stay compliant.

Baker Tilly Vantagen professionals Kim Wylam and Deanna Kempinski recently discussed high level human resources and payroll regulatory matters that are changing and offered a potential solution to help employers stay compliant and mitigate risk.

Key regulatory updates

FLSA salary threshold increases

On April 23, 2024, the Department of Labor (DOL) announced its final rule that increases the exempt salary threshold for employees under the FLSA. The changes are likely to face legal action and there are concerns that the new rule places greater importance on the salary amount paid to the employee than the actual work performed. Employers should not wait to take action. They need to make sure they are preparing today. Take the time to review your job descriptions and validate the FLSA classification of your positions. Check compensation levels and account for any changes planned between now, July 1, 2024, and Jan. 1, 2025, and consider the impact on the organization.

Pregnant Workers Fairness Act (PFWA)

The Equal Employment Opportunity Commission (EEOC) issued the final regulation that goes into effect June 18, 2024. This regulation applies to private and public sector employers with 15 or more employees, as well as Congress, federal agencies, employment agencies and labor organizations. The PWFA provides reasonable accommodations for qualified applicants or employees who have known limitations. These are defined as physical or mental conditions related to, affected by, or arising from pregnancy, childbirth or related medical conditions.

Noncompete agreements

The U.S. Federal Trade Commission (FTC) approved a proposed final rule banning most noncompete clauses in employment contracts potentially impacting millions of employees. This rule makes all existing noncompete agreements (except those covering senior executives) unenforceable and requires employers to provide notice to current and former employees that their noncompete clauses are no longer in effect.

Pre-employment inquiries

States and localities continue to enact regulations that limit the types of inquiries an employer can make during the recruitment and hiring process. If you’re recruiting for talent across multiple states, you face additional levels of complexity, since in most cases, a candidate’s location generally determines which legal protections apply to the pre-employment process.

Pay transparency

The trend of state mandated pay transparency continues to gather momentum and employers must be prepared. There are approximately 29 states with some type of pay transparency regulations in effect. Readiness involves understanding your legal obligations and then developing a plan to address how those requirements affect your current employee population and potential applicants.

Paid leave

The number of states that have enacted paid leave laws continues to grow and the list of reasons for those leaves is expanding. As these regulations go into effect, check your existing policies to determine if any changes will need to be made. If changes are made, communicate those to impacted employees as soon as possible and make sure they understand the benefits they are entitled to. Ensure you have adequate procedures in place for tracking leave and meeting all administrative requirements.

There are many ways companies can stay current on multistate HR and payroll compliance requirements, but it’s important to choose your resource carefully. Risks for non-compliance include penalties, fines, legal action and administrative proceedings.

The Employer State Compliance Roadmap is Baker Tilly’s solution to helping employers manage multistate HR and payroll compliance requirements. The Roadmap is an on-demand, subscription-based resource designed to provide employers with access to each state’s HR and payroll compliance requirements in an easy to use, searchable database.

For more information, watch the on-demand webinar now, or contact us to discuss how we can help.

Kim Wylam
Managing Principal
domains one two iia standards
Next up

Domains I and II: Diving deep on the IIA Standards